
s^^ 






DEPARTMENT OF THE INTERIOR 

BUREAU OF EDUCATION 



BULLETIN, 1922, No. 6 



STATE POLICIES IN PUBLIC 

SCHOOL FINANCE 



By 



FLETCHER HARPER SWIFT 

PROFESSOR OF EDUCATION. COLLEGE OF EDUCATION 
UNIVERSITY OF MINNESOTA 




WASHINGTON 

GOVERNMENT PRINTING OFHCE 

1922 



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DOCUMENTS DlVi«ION 






CONTENTS. 



Page. 

Author's prefatory note iv 

Declining importance of State school funds 1 

Increasing school costs 1 

The division of, school costs 4 

Diminishing State support 5 

Evils resulting from local support 13 

School revenues and national aid 17 

Federal land grants 20 

Federal money grants 20 

Existing and potential State sources of school revenue 23 

Permanent school funds 26 

Fictitious State permanent school funds 28 

Productive public permanent school funds 30 

Appropriations 33 

State school taxes 34 

State school mill taxes 36 

Poll and miscellaneous taxes 37 

Taxes on corporations, special types of property, income, inheritance, and 

occupations 38 

Corporation taxes 39 

Income taxes • 40 

Inheritance taxes 41 

The remedy 45 

limited possibilities of permanent school funds 49 

Appropiiations versus taxation 49 

m 



AUTHOR'S PREFATORY NOTE. 



The present monograph has been "wiitten with a view to presenting in a simple 
and concise manner to the general educational public the most significant conclu- 
sions reached in the course of an extensive study of school finance, continued for 
several years and covering a number of States. 

Some of the data have been taken from bulletins of the Bureau of Education and 
some from Census Bureau bulletins. By far the largest number, however, have 
been taken from the following studies by the author and by graduate students work- 
ing under his direction: 

F. H. Swift: 

1. Public School Finance in Alabama. 

2. Public School Finance in California. 

3. Public School Finance in Colorado. 

4. Public School Finance in Illinois. 

5. Public School Finance in Massachusetts. 

6. The Declining Importance of State Funds as Sources of School Revenue. 
Richard A. Graves: 

7. Public School Finance in New York. 

8. Public School Finance in Vermont. 
E. W. Tiegs: 

9. Public School Finance in New Jersey. 
Edwin C. Culbert: 

10. A Study of State School Taxation and Appropriations in State School Tax 

States. 
Frances Elizabeth Kelley: 

11. A History of Public School Support in Minnesota. 

It has seemed unwise, in view of the public for whom the present monograph is 
designed, to burden the text with footnotes. 

Fletcher Harper Swuft. 
University of Minnesota, 

Minneapolis, November 8, 1921. 



STATE POLICIES IN PUBLIC SCHOOL FINANCE. 



I. DECLINING IMPORTANCE OF STATE SCHOOL FUNDS. 

INCREASING SCHOOL COSTS. 

In 1890 the United States expended $140,000, 000 for public schools; in 1918 the 
amount spent was $763, 000, 000, an increase of 445 per cent. If a longer period be 
surveyed, the increase is even more astounding. Thus comparing the year 1871 
with that of 1916, a lapse of 45 years, we discover an increase for the United 
States as a whole of more than 800 per cent, while the increase in expenditure by 
our chief divisions ranges from an increase of 675 per cent by the North Atlantic 
Division to an increase of 3,950 per cent by the Western Division. The numbers 
of millions of dollars expended for public schools, in the years 1871 and 1916, by the 
United States as a whole, by the five major divisions, and by the State in each of 
these di"vdsions which in 1871 ranked highest within its group, are shown by the 
following table: 

Table 1. — Millions of dollars expended for public schools, 1871 and 1916.^ 



Groups and States. 



1871 


1916 


G9 


640 


29 


205 


28 


248 


4 


63 


3 


42 


2 


81 


9 


68 


6 


40 


1 


8 


1 


4 


1 


32 



Per cent 
of in- 
crease. 2 



I. United States 

II. Divisions: 

North Atlantic 

North Central 

South Central 

South Atlantic 

Western 

m. Representative States: 3 

New York (North Atlantic Division) 

Ohio (North Central Division) 

Kentucky (South Central Division).. 
Maryland (South Atlantic Division). 
California (Western Division) 



827 

675 

785 

1,475 

1,300 

3,950 

655 
566 
700 
300 
3,100 



1 Amounts taken from Report of Commis. of Educ, 1917, vol. 2, p. 80. 

2 Computed. 

3 States which in 1871 ranked highest within their respective divisions in school expenditures. 

The vast increases in school expenditure revealed by Table 1 are the result of the 
interaction of many different factors — the rapid increase both in total and in school 
population, the lengthening of the legal school year, the extension and increasingly 
effective enforcement of compulsory education laws, the placing by the community 
upon the school of a larger and larger number of functions, resulting in the introduction 
of many new types of studies and activities. It is impossible to consider here these 
various factors and the part they have played in increasing school costs. We may, 
however, show what is perhaps the most influential of all the above factors, namely, 
the growth in average attendance. In like manner, the increase in the annual average 
expenditure per child epitomizes the net result of the interaction of most, if not all, 
of the factors at work. Data bearing upon these two factors are gathered together in 
Table 2, which shows by 10-year periods the increase from 1870 to 1918 in (1) the 
number of children in average attendance, (2) the annual expenditure per child in 
attendance, (3) the total annual expenditure. 



2 STATE POLICIES IN PUBLIC SCHOOL FINANCE, 

Table 2. — Increasing attendance and school costs in the Jnited States, 1870-1918. 



Years. 


Mil lions of 
ciiildren 
in average 
attend- 
ance. 


Average 
annual 
expendi- 
ture per 
child. 


Millions of 
dollars ex- 
pended. 


1870 


4 
6 
8 
10 
12 
14 
15 


$15 
12 
17 
20 
33 
44 
49 


63 


1880 


78 


1890 


140 


1900 


214 


1910 


426 


1915 


605 


1918 


763 






Per cent of increa'ie 1^70 to 1918 


275 


22G 


440 







In Figure 1 are shown graphically the increase in dollars in per capita cost per 
pupil in average daily attendance; the increase in costs per capita of total population; 
and the increase (in cents) in the average cost per day for each pupil attending. 




Fig. 1.— The total per capita cost of education at various periods, 1870-1918.1 

From Table 2 we see that in 1918 there were nearly 4 times as many children in 
average daily attendance as in 1870, that the expenditure per child was more than 3 
times as gi'eat, and the total expenditure more than 12 times as great. Rapid as has 
been the increase in expenditure, it has not kept pace with the growing demand for 
educational opportunities and the growing costs. Burgess writes: 

The same items of school expenditures will cost roughly twice as_ much in 1920 as 
in 1915. This does not allow for any increase in school efficiency or in school accomo- 
dations. It is the sum required to buy the same kind and quantity of education the 
schools offered in 1915.^ 

1 Taken from Bu. of Educ. Bui., 1920, No. 11, p. 65. 

2 Burgess, W. Randolph. Trends of School Costs, pp. 114-115. 



STATE SCHOOL, FUNDS I DECLINING IMPORTANCE. 3 

It is evident that the increase in school census will make inadequate in 1920 the 
quantity of education adequate in 1915. Moreover, taking the United States as a 
whole we may say that educational standards are to-day far higher than in 1915, a 
factor which will increase still further the expenditure for schools. 

That as a nation we are failing to provide thousands and thousands of prospective 
citizens with the educational opportunities essential to individual and national 
intelligence, morality, and welfare is only too evident. From almost every State 
come reports of an ominous shortage of teachers, buildings, and equipment, and 
accounts of frantic attempts to reduce in the name of economy school curricula to the 
narrow arid state of generations gone. Whatever one's individual attitude toward the 
situation, whether he believes it is essentially economic or regards it as resulting 
largely from a lack of public and professional idealism, the fact remains that adequate 
buildings, trained teachers, and a \T.tal curriculum can be provided only as sufficient 
revenues are secured and then distributed in a manner to secure results commensurate 
with expenditures. In other words, the educational crisis of which we hear on every 
hand is in its last analysis a financial crisis. In its presence we are confi'onted first by 
the demand that it be met, second by the query how. 

The most natural answer to the query just stated is by increasing local taxation. 
Even a cursory study of the history of school support in the United States will show 
that this is the manner in which increases in school burdens have been cared for 
during the last 50 years. Not only is tMs true, but it has been a commonly accepted 
principle that local taxation is not only the most just method of supporting schools 
but the most wholesome in its effects. But after 50 years of support by local taxation, 
we find ourselves in an educational situation marked by economic and educational 
inequalities. On the one hand, we have wealthy communities levying school" taxes 
of less than 1 mill and able from the proceeds to maintain schools of the liighest stand- 
ard; on the other hand, exceedingly poor communities levying taxes of over 100 
mills, but scarcely able to maintain schools of minimum standard. In view of these 
and many other facts which might be cited, it would seem that the time has arrived 
when we should undertake to ascertain whether or not a thoroughgoing modification, 
perhaps, indeed, a complete reversal of our traditional policies of school support, 
may not be necessary. May not the solution of our financial difficulties lie in shifting 
the burden in such a manner as to make the major portion of its weight rest upon the 
State rather than upon the local communities? This, indeed, is the thesis which 
the following pages will present. The presentation will be made under the following 
topics: 

1. The present division of the burden of school support between the States and 

their constituent local units. 

2. The division of this burden in the past and the declining relative importance 

of State funds as sources of school reA^enue. 

3. The effect of systems of local support as seen in educational and financial 

inequalities. 

4. Recent notable efforts to secure larger State revenues for schools. 

5. Imperative need of vastly increased revenue. 

6. Sources from which such revenue may be secured: 

(1) From already existing or from newly provided sources. 

(2) From local, State, or Federal funds. 

7. Existing Federal sources. 

8. Existing State sources. 

9. Conclusions and recommendations. 



4 STATE POLICIES IN PUBLIC SCHOOL FINANCE. 

THE DIVISION OF SCHOOL COSTS. 

In the year 1918 approximately 75 per cent of the $763,000,000 expended in the 
United States on public schools was furnished by local units — districts, towns, town- 
ships. Approximately 8 per cent was furnished by the counties and 17 per cent 
by the State. A more accurate statement is presented in the following table: 

Table 3. — Division of burdens of school support, 1918, as shoion by percentage analysis 

of receipts. ^ 

State 2 16.8 

County 7. 9 

Local 75. 3 

Total 100. 

How widely this distribution of school burdens among the various contributing 
units, Nation, State, county, and local community, varies in different States is shown 
by Table 4. 

Table 4. — Percentage analysis of school receipts on basis of the units furnishing the 
same in the United States and six selected States.^ 



Classes of sources. 



Federal'. 

State 

County 

Local (i. e., district or town) 

Balance from previous year 

Miscellaneous 



Total. 



United 

States, 

1918. 



(2) 
16.8 
7.9 
75.3 



e) 



Alabama, 
1915. 



52.7 



29.2 

"is.'i' 



Califor- 
nia, 1918. 



0.2 
17.7 
28.1 
37.6 



16.4 



100.0 



Colorado, 
1915. 



53.6 
11.3 
13.4 



Massa- 
chusetts, 
1917. 



0.1 

2.8 



95.9 
"'i.'2' 



New 
York, 
1918. 



(5) 



86.6 
'3.' 9' 



Ver- 
mont, 
1918. 



e) 



21.4 



73.3 
"5.'3 



1 Data taken from studies (published and unpubUshed) of public school finance in States named. 
■ 2 Included in State receipts; a negUgible per cent. 
3 Not reported. 
< Includes Federal and county. 

Tables 3 and 4 have shown the per cent of total school receipts furnished by each 
type of contributing unit. Our interest in the present case, however, lies especially 
in the question, what per cent of total school costs has been paid by the State, and 
further, how widely does the per cent furnished by the State vary? These questions 
are answered for the year 1918 by Tables 5 and 6, which show (Table 5) the States 
arranged in seven groups, and ranked on the basis of the per cent of school receipts 
provided by the State, and (Table 6) the number of States in each group, together 
with the State ranking highest, median, and lowest. 

Table 5. — Per cent of school burdens borne by the State.^ 



I. More than 60 per cent: 

1. Alabama 63.7 

II. 50-59 per cent: 

2. Georgia 50. 4 

III. 40-49 per cent: 

3. Mississippi 49. 7 

4. District of Columbia 48.8 

5. Kentucky 46.5 

6. New Jersey 45.3 

7. Maine 44. 6 

8. Texas 41.0 



IV. 30-39 per cent: 

9. Nevada 37.2 

10. Utah 35.6 

11. Maryland 31.7 

12. Virginia 30. 5 

V. 20-29 per cent: 

13. Minnesota 28.5 

14. Arkansas 28. 2 

15. Delaware 26.8 

16. Wyoming 26.1 

17. Louisiana 24. 1 



1 Bu. of Educ, Bui., 1920, No. 11, p. 122. 

2 Receipts from Federal sources included in "State." 

3 For the year 1917-18, Bu. of Ed. BuU., 1920, No. 11, p. 122, Table 44. 



STATE SCHOOL FUNDS *. DECLINING IMPOKTl^NCE. 



Table 5. — Per cent of school burdens borne by the State — Continued. 



V. 20-29 per cent — Continued. 

18. Florida 23.1 

19.5 Vermont 22. 3 

19.5 California 22. 3 

21. Michigan 22. 

22. Washington 21.9 

23. Arizona 21. 1 

24. New Mexico 20. 7 

VI. 10-19 per cent: 

25. Tennessee 19.6 

26. Wisconsin 18. 

27. Indiana 17. 2 

28. South Dakota 16. 6 

29. North Dakota 15. 1 

30. Oklahoma 14. 5 

31. North Carolina 14. 2 

32.5 South Carolina 13. 1 

32.5 Idaho 13.1 



VI. 10-19 per cent — Continued. 

34. Montana 12.9 

35. Missouri 12.0 

36. Connecticut 10.2 

VII. 0-9 per cent: 

37. Pennsylvania 9. 6 

38. New York 9. 5 

39. West Virginia 9.2 

40. Nebraska 8.7 

41. Ohio 8.2 

42. Illinois 7.7 

43. Colorado 7.1 

44. New Hampshire 6. 4 

45. Rhode Island 5. 7 

46. Oregon 5. 5 

47 . Massachusetts 3.7 

48. Kansas 2. 9 

49. Iowa 2.2 



Table 6. — Per cent of school burden borne by States — Summary. 



Groups. 


Per cent. 


Number 
of States 
in group. 


I ... 


More than 60 


1 


11 


50-59 


1 


Ill 


40-49 


6 


IV 


30-39 


4 


V 


20-29 


12 


VI 


10-19 


12 


VII - - 


0-9 


13 




Total 










49 













Comparative ranks: 

Highest, Alabama 63. 7 

Approximate median, Tennessee 19. 6 

Lowest, Iowa 2. 2 

Various writers on school finance' have urged that the State ought to furnish from 
one-third to one-half of the total school revenue. From Table 6 we see that there are 
only two States in the Union which derive more than 50 per cent of their revenue 
from tliis source. Thirty-seven States — that is, approximately, three-fourths of the 
States-— receive considerably less than one-third of their school moneys from State 
sources. The per cent actually derived from State funds is less, and tha-t derived 
from local sources is greater than appears from the above tables for two reasons: (1) 
The moneys reported as State receipts in Federal bulletins from which our data are 
taken include certain Federal moneys, notably proceeds from Federal forest reserves 
and from Smith -Hughes grants; (2) because "nonrevenue receipts," i. e., local moneys 
derived from sale of school bonds, from temporary loans, and from sale of school prop- 
erty, are not included. 

DIMINISHENG STATE SUPPORT. 



However interesting and significant the distribution of the school burden at the 
present time may be, a matter of greater significance is the trend of tliis distribution. 
Are the States shouldering a larger or a smaller portion of the total cost from year to 
year? The answer to this question in the negative has already been suggested in an 
opening paragraph. Consider first the tendency in Massachusetts, New York, and 
Vermont — three of the oldest States, States in which consequently conditions may be 
88213°— 22 2 



6 



STATE POLICIES IN PUBLIC SCHOOL FINANCE. 



expected to be more stable, and tendencies less varying than in some of the newer 
States. From these three States pass to a newer State, California, noted for its readi- 
ness to adopt new and progTessive educational policies. A special interest attaches 
to California, moreover, for the reason that it has been a pioneer in raising school 
revenues by placing State taxes on corporations and upon inheritances. After con- 
sidering the tendencies in these four States, attention will be turned to the United 
States as a whole. The tendencies in the four States just named are pTesented in 
tabular form by Tables 7, 8, 9, and 10, which follow: 

Table 7. — Neii} York school revenues, 1905-1918.^ 
[Amounts stated in thousands of dollars.] 



Sources. 


190.5 


1908 


1912 


1918 




4,235 

30.3 

32,716 

11,011 


4,719 

338 

49,922 

1,460 


5,232 

332 

53,331 

1,616 


7,520 




358 




71,797 




3,085 






Total 


48, -866 . 


50, 440 


60,512 


82,762 






Percentage analysis:_ 


8.7 

.6 

66.9 

23. S 


8.4 

.6 

88. 4 

2.0 


8.7 

. 5 

88.1 

2.7 


9.1 




.4 




80.8 




3.7 







1 Data taken from an unpublished Study toy E-. A. Graves, graduate student in the college of education. 
University oi Ttf innesota. 

2 In the"New York State official reports, income from permanent funds is included in the State appro- 
priation; in the present study the revenues received from those two distinct sources are separated. 

From Table 7 it is seen that the per cent oi the total annual school revenue in New 
York furnished by the State has varied very slightly during the last 14 years. There 
is, moreover, no evidence of any general tendency toward a decline of the importance 
of the State as a source of revenue. The most marked change appears in the per 
cent of revenue derived from local taxation. In the year 1905 this source furnidied 
about 70 per cent, but three years later it contributed over 88 per cent, and appears 
to have continued to furnish approximately this proportion of the revenue in each 
of the succeeding years presented in the table, although falling off slightly in 1918. 
Comparing, however, the large proportion of the total revenue, only a little less than 
one-fourth, reported in 1905 as derived fi'om miscellaneous sources and the per cent 
derived in that year from local taxation, with corresponding data for succeeding 
years, it is seen that the per cent of increase furnished by local taxation is ahnoat, 
thongh not exactly, equal to the per cent decrease reported as derived from miscel- 
laneous sources. It may well be, then, that the marked increase in local taxation 
after 1905 is more apparent than real; for the increase in the per cent of total revenue 
assigned to this source may he dne to the fact that revenues reported in 1905 as de- 
rived from miscellaneous sources were in succeeding years included among those 
reported as local taxation. "Wliether this be true or not, the fact remains that the per 
cent of the total revenue derived from State sources varies very slightly throughout 
the 14-year period under consideration, despite the fact that the annual expenditure 
during this period increased from 48 to 82 millions of dollars. From this considera- 
tion of tendencies in the wealthiest State, turn to Table 8, which presents the case of 
one of the poorest States, Vermont, a State which in fact ranked forty-fifth in the 
year 1918 in taxable wealth, there being only four poorer States in the entire Union. 



STATE SCHOOL. FUNDS; DECLINING IMPORTANCE. 7 

Table 8. — Source and per cejit analysis of Vermont school rceeipt-'i, 1909 and 1918.^ 



Sources. 


Amounts, in thou- 
sands ot dollars. 


Per cent of total 
receipts. 


Decrease 




1909 


191S 


1909 


1918 


( + ). 


State 


269 

1,192 

42 

32 


336 

1,836 

88 

19 

25 


17.5 

77.6 

2,8 

2.1 


14.6 

79.7 

3.8 

.8 

1.1 


-2.9 




+2.1 




+ 1.0 




-1.3 




+ 1.1 












Total 


1, 535 1 2. 304 


IGO.O 


100.0 













1 Data taken from an unpublished study by Richard A. Graves, graduate student In education, college 
of education, University of Minnesota. 

Comparing the opening and closing years of the decade of school support in Ver- 
mont tabulated in Table 8, no startling changes are discovered. In 191S, town taxa- 
tion furnished 2.1 per cent more of the total school revenue than in 1909, and the 
State furnished 2.9 per cent less. This decline, slight as it is, is significant, as it 
indicates the tendency in an exceedingly poor State to throw a heavier and heavier 
share of the school burden upon local units already in hundreds if not thousands of 
cases heavily taxed. We may note further that, whereas in 1918 Vermont ranked 
twenty-seventh, 14 ranks below New York (thirteenth) with respect to annual current 
expenditm'e per pupil in average attendance, Vermont ranked sixth and New York 
ninth with respect to total expenditure for schools on each $100 of estimated taxable 
wealth.^ 

From this survey of tendencies in the richest and in one of the less wealthy States in 
the Union, turn to Massachusetts, a State which has long led in the policy of placin.g 
an overwhelming portion of the State financial burdens upon local units. 

Table 9. — Massachusetts school receipts, 1905, 1915, and 1916.^ 



Sources. 


Per cent of revenue. 


1904-5 


1914-15 


1915-16 


State: 


1.21 

.87 


0.77 
1.05 


0.76 




1.00 






Total State 


2.08 


1.82 


1.76 






Local: 

Tax . . 


96.57 
1.35 


97.22 
.96 


97.10 




1.14 






Total local 


97.92 


98. 18 


98.24 







1 Data taken from Reports of Commis. of Educ;, 1905, 1 : 411, Table 13, and 1917, 2 : 52 and 79. The 
commissioner's data do not include State appropriations for vocational education. Such an omission, of 
course, reduces the per cent derived from State appropriations. 

From Table 9 we see that in Massachusetts at the end, as at the beginning, of the 
12-year period under consideration the State bore an almost negligible share of the 
burden of financing the schools. Throughout this period there was almost no change 
in the per cent of the revenue furnished by the local units. There was a slight decline 
in the year 1918 (not represented in Table 9), but this decline was only thirty-two him- 
dredths of 1 per cent. The increase in the proportion of the total revenue furnished 

J These ranks refer to the rank of States among the 49 imits (including District of Columbia) constituting 
the United States. Ranks computed from data taken from Bu. of Educ, Bui., 1920, No. 11, pp. 148-149, 
153. 



STATE POLICIES IN PUBLIC SCHOOL FINANCE. 



by the local units was also less than 1 per cent, being in fact only twenty-two hun- 
dredths of 1 per cent. In the case of Massachusetts we have a Commonwealth for 
centuries wedded to the idea of local support and local control and correspondingly 
hostile to State support. 

Table 10 shows for the years 1909, 1913, and 1918 the total revenues received in Cali- 
fornia for both elementary and secondary schools. The total revenue furnished by 
the State to elementary schools is known as the "State school fund" and the total 
State reveniie furnished to secondary schools as the "State high-school fund." Table 
10 shows the total "State school fund," the "State high-school fund," and the quota 
available from each for each pupil enrolled in the elementary and secondary schools, 
respectively, for the years indicated. 

Table 10. — California school revenue aiid State aid per child enrolled.^ 





Total re- 
ceipts for 
elemen- 
tary and 
secondary 
schools, 
millions 
of dollars. 


Thousands of pcr- 
pils enrolled in 
schools. 


State school fund. 


State high-school 
fund. 




Elemen- 
tary. 


Second- 
ary. 


Thou- 
sands of 
dollars. 


Per pu- 
pil en- 
rolled. 


Thou- 
sands of 
doUars. 


Per pu- 
pil en- 
rolled. 


1909 


12.8 
20.7 
29.7 


312 

377 
448 


34 
58 
126 


5,741 
6,614 
6,139 


S18. 38 
14.85 
13.68 


333 
572 
948 


S9.72 


1913 


9.85 


1918 


7.48 







1 From an unpublished study by the author. 

From Table 10 we see that during the 10 years 1909 to 1918, although the annual 
expenditure for schools increased from $12,000,000 to $29,000,000, the total amount 
furnished by the State decreased per pupil enrolled in the elementary schools from $18 
to $13 and in the secondary schools from $9 to $7. 

It was early in this decade that California abolished her State property school tax 
and adopted the policy of drawing her State school fund and her high-school fund 
largely from the proceeds of taxes on corporations and inheritances. Table 11 presents 
a comparison of the annual proceeds of property and poll taxes combined, with those 
of corporation and inheritance taxes. 

Table 11. — Corporation and inheritance taxes in California versus property and poll 

taxes as sources of school funds, 1909-1918.^ 

[Numbers in columns indicate dollars in millions and tenths of millions.] 





State 
school 
fund, 
annual 
total. 


Total de- 
rived 
from pro- 
perty tax 
and poll 
taxes. 2 


Proceeds from taxes.2 


Years. 


On 
corpora- 
tions. 


Inherit- 
ances net 
amount 
paid to 
State. 


Total. 


1909 


6.7 
0.0 
6.1 
6.4 
5.6 
5.9 
6.9 
6.9 
0.0 
6.1 


3.9 
4.0 
4.1 
1.2 








1910 








1911 








1912 


10.3 
10.8 
12.9 
13.5 
14.9 
15.6 
16.3 


1.0 
1.5 
1.6 
2.9 
3.1 
3.8 
2.7 


11.3 


1913 


12.3 


1914 


14.5 


1915 . 




16.4 


1916 




18.0 


1917 . .. 




19.4 


1918.. . 




19.0 









1 Data in Table 11 taken from an mipublished study on " Public School Finance in California," by the 
author. 

2 Computed. 

3 No property taxation after 1912, although a small revenue continued to be derived from delinquent poll 
taxes. 



STATE SCHOOL FUNDS : DECLINING IMPOET^NCE. 



9 



The constitutional amendment which prowled for the corporation tax specilied 
that public schools were to have the first claim upon the proceeds of this tax. The 
first year in which this tax became effective, 1912, it produced approximately two 
and one-half times as much revenue as had been produced by the school property 
tax and poll taxes in their most productive year, 1911. The total State school fund 
and high school fund in 1913 amounted to 6.1 millions and in 1918 to 7 millions, whereas 
in these same years the proceeds from State corporation taxes amounted to 10.8 millions 
(1913) and 16.3 millions (1918). It is e\ident that the decline in State aid per child 
enrolled — in other words, the decline in the relative importance of State-provided 
school funds — was not dire to the fact that the revenue produced by State corporation 
taxes was inadequate to provide a larger share of the school costs. The explanation 
lies rather in the fact that California, although having more than sufficient revenue, 



PER CSST OF SCHOOL SSYSmrB FKOM: 
80 70 6o $0 40 

20 30 40 50 60 




Fig. 2. — Percentage of total school revenue derived from the various sources, 1S90-191S 



not merely to maintain her former quota per child but to increase the same, was un- 
convinced of the necessity of doing so. She accepted and practiced a principle 
accepted and practiced nationally, namely, that increases in school costs should be 
financed more and more by the local units, and that the State should shoulder less 
and less a proportion of the financial burdens of public education. 

In 1920 California recognized the necessity of a changed policy and took what is 
perhaps the most radical step yet taken by any State, in the direction of State aid, 
By a constitutional amendment (Art. IX, sec. 6) adopted November 2, 1920, she 
provided that the State shall grant $30 annually for every elementary or high-school 
child in average daily attendance. 

The tendencies we have discovered at work in individual States assume far greater 
significance when we discover that they characterize the history of school finance 
throughout the Nation, Figm'e 2 and Table 12 show the increase in the proportion 



I Taken from Bu. of Educ. Bui. 1920, No. 11, p. 54. 



10 



STATE POLICIES IN" PUBLIC SCHOOL FINANCE. 



of the total public school receipts derived from local sources, and the steady decline 
in the proportion furnished by the State during a period of 28 years, 1890 to 1918. 

Table 12. — Percentage analysis of public school receipts in United States, 1890-1918} 





A. Percentage analysis of total receipts. 




1890 


1895 


1900 


1905 


1910 


1915 


1918 




23.75 

67.89 

8.36 


23.4 
67.0 

9.6 


20.3 
68.9 
10.8 


19.06 
69.64 
11.30 


18.1 
72.1 

9.8 


18.35 

77. £0 

4.15 


3 16.8 




75.3 




7.9 






Total 


100.00 


100.0 


100.0 


100.00 


100.0 


100. 00 


100.0 








B. Percentage provided by permanent funds,^ 
State taxes and appropriations. 


and by 




5.45 
18.30 


4.7 
18.7 


4.2 
16.1 


4.37 
14.69 


3.2 
14.9 


2.90 
15.45 


2.9 




13.69 






Total 


23.75 


23.4 


20.3 


19.06 


18.1 


18.35 


5 16.9 







1 All data from reports of U. S. Commissioner of Education. 

2 Includes some Federal moneys. 

s Includes S639, 057 of Smith-Hughes moneys. 

1 Includes a negligible percentage from local funds. , ^, ^^ . , 

6 This total is not identical with the figure given as State sources in part A of this table. The United 

States commissioner in this latest bulletin uses a different system of computation, so that changes were 

necessary in order to get data comparable with earlier years. The slight difference might be the result 

of omission of small Federal contributions included generally in State receipts. 

Table 12 reveals a continuous decline in the percentage of the total burden of school 
support borne by the State. Recalling that in New York and in Massachusetts the 
per cent of the total school revenue contributed by the State, although small, varied 
little throughout a considerable number of years, we are led to inquire whether the 
importance of the State as a source of school revenue may not vary considerably 
with the section of the country studied. The answer to this question is presented 
by Table 13, which shows the per cent of the total school revenue furnished by the 
State in the United States as a whole and for each of the major divisions in the years 
1890, 1905, and 1915. It should be noted that the divisions are arranged in the order 
of the per cent contributed by the State in the year 1890. 

Table 13. — Decrease in per cent of total school receipts furnished by the State in the 
United States and iyi its five major divisions. 



Divisions. 


1890 


1905 


1915 


Decrease 

1890 to 

1915 

(per 

cent). 




23.75 

17.11 
17.61 
29.40 
46.39 
65.23 


19.06 

12.63 
14. 23 
32.94 
40.70 
47.82 


18.35 

13.78 
14.24 
25.90 
27.29 
35. 72 


5.40 


Divisions: 


3.33 




2.37 




3.50 




19.10 




29. 51 







From Table 13 we see that the least decline in the importance of the State as a 
source of school revenue lies in the North Central Division, which in this respect 
ranked next to the lowest of the five groups in 1890, and the greatest decline in the 
South Central Division, the division which in 1890 ranked highest. The only group 
in which any increase appears in the years here presented is the Western. In thia 
group in 1905 the State furnished 3.5 per cent more of the total school revenue than it 



STATE SCHOOL FUNDS: DECLININO IMPORTANCE, 



11 



did in 1890. The reason for this is to be found in the fact that, of the 11 States included 
in the Western Division, 7 derived no revenue from permanent school funds in 1890, ^ 
whereas in 1905 each of these 7 derived a considerable percentage of its total school 
revenue from this source; moreover, of these 7 States 4 had been admitted recently; 
Montana and Washington were admitted in 1889, Idaho and Wyoming in 1890, Utah 
in 1896, while Arizona and New Mexico were not admitted until 1912. Table 14 
Bhows the per cent of total revenue derived from permanent common school funds in 
the Western States in four selected years, and also the date of admission of these States. 

Table 14.: — Ptr cent of school reventt^ derived from pernmnent <x>mmon school funds in 

Western Division. 



States. 


Year of 
admis- 
sion. 


1890 


1905 


1915 


1918 


Western Division 




29.4 


32.9 


25.9 


5.1 








California 


1850 
1859 
1864 
1876 
1889 
1889 
1890- 
1890 
1896 
1912 
1912 


0.18 
.48 

1.13 
.27 
.00 
.00 
.00 
.00 
.13 
.00 
.00 


6.0 
13. 53 

2 47. 19 

4.97 

3.6 

8.0 

10.2 

49.3 

21.2 

1.18 

7.4 


0) 

6.67 
26.83 

7.41 
12.5 

6.65 
12.63 
38.4 

4.62 

24.51 


1 3 


Oregon 


5 3 


Nevada 


19 7 


Colorado 


6 8 


Montana 


19 7 


Washington. 


5 9 


Idaho 

Wyoming 


12.8 
24 1 


Utah.. .... 


4 6 


Arizona 

New Mexico 


4.2 
20.2 



1 Not reported separately. 



2 For 1906. 



The greatest decrease in any of the di\T-sions included in Table 13 in the per cent 
of revenue furnished by the State was in the South Central and South Atlantic groups. 
Table 14 shows this decline in each of the seven States included in the South Central 
group, and in three South Atlantic States, namely, Georgia and the two Carolinas. 
These three States have been selected because in 1890 they ranked highest in the 
South Atlantic Division in respect to the per cent of their total school revenue derived 
from State sources. 

In considering the negligible per cent of total school revenue derived from local 
sources in 1890 it should be borne in mind that local taxation for schools is compara- 
tively new in the South. In many States it was not even permissible until very 
recently, e. g., in Alabama it was not permissible until 1901. 

Table 15. — Per cent of total school receipts provided by the State in the South Central 
States and three South Atlantic States in 1890 and 1918. 





1890 


1918 


Increase 
(-t-)or 


States. 


Rank.a 


Per cent. *> 


Rank." 


Per cent. c 


decrease 

(-),per 

cent. 


Alabama 


5 
8 
7 
6 
10 
9 
4 
1 
2 
3 


67.7 
48.9 
56.5 
59.3 
37.2 
44.3 
77.4 
82.7 
81.7 
79.8 


1 
6 
2 
4 
7 
3 
9 
10 
8 


63.7 
28. 2 
50.4 
40.5 
24.1 
49.7 
14.2 
13. 1 
19.6 
41.0 


— 40 


Arkansas 


-20.7 


Georgia.. 


— 61 


Kentucky 


—12 8 


Louisiana 


— 13. 1 


Missis.sippi 


-1-5.4 


North Carolina 


-63.2 


South Carolina 


—69.6 


Tennessee 


-62.1 


Texas 


— sas 







a Computed. 

6 Computed from data of Rep. of Commis. of Ed., 1889-90, 1:22, by adding per cent derived from permanent 
funds and rents to per cent derived from State taxes. 

c Column 2, Table 44, Bu. of Educ. Bui., 1920, No. 11, p. 122. 

» Rep. of Commis. of Educ, 1889-90, 1, p. 22, Table 10. 



12 



STATE POLICIES IIS^ PUBLIC SCHOOL FINANCE. 



Of the 10 States inciuded in Table 15, ^lississippi is the only one in which a larger 
per cent of the total school reA^enue came from the State in 1918 than in 1890. In 
two States, Alabama and Georgia, the difference between the proportion of school 
revenues furnished in 1890 and 1918 was small. In every one of the rernaining seven 
States the difference was marked, varying all the way from a decrease of 12.8 per cent 
in Kentucky to approximately 70 per cent in South Carolina. In 1918 (see Table 6) 




Fig. 



-Rise and decline of the State as a source of school revenue. 



the States ranking highest, median, and lowest with respect to per cent of receipts 
furnished by the State, were Alabama, Tennessee, and Iowa. In order to amplify 
our comprehension of the history of the State as a factor in school finance, it has seemed 
v/ell to show here in Table 16 the part played by the State in the three States just 
named and in the two States ranking closest to each of the three. The rise and decline 
of the State as a source of school revenue in Alabama, Georgia, Kansas, Iowa, and in 
the United States is shown graphically in figure 3. 



EVILS FKOM LOCAL SUPPORT. * 

Table 1G. — Per cent of total school receipts furnished by the State} 



13 



states. 


1X90 


1895 


1900 


1905 


1910 


1915 


1918 


Alabama 


67.76 
5n. 53 
44.29 

7.07 
81.69 
19.53 

3.35 
7.23 
2.90 


80.6 
72.9 
81.9 

.0 

87.8 
16.3 

1.6 
9.2 

2.8 


82.3 
64.4 
59.4 

91.5 
7.2 
13.3 

1.2 
9.4 
1.4 


65.57 
66.40 
73.34 

60.02 
19.66 
17.29 

2.08 
7.90 
8.02 


74.1 
53.0 
55.2 

7.8 
15.9 
15.8 

2.0 
6.1 

7.5 


52.72 
44.82 
51.58 

30.13 
19.18 
20.56 

1.82 
3.53 
8.31 


63.7 
50.4 


Mississippi 

New Mexico 


49.7 

20.7 
19.6 


Wisconsin 

Massachusetts 

Kansas 

Iowa 


18.0 

3.7 
2.9 
2.2 







1 Includes certain moneys derived from Federal grants. Needless to say, the only one of these available 
to all the States was the Smith-Hughes grant, first apportioned among the States in 1918. 



II. EVILS RESULTING FROM LOCAL SUPPORT. 

' The preceding chapter has shown conchisively that throughout the last 50 years the 
importance of the State as the bearer of school financial burdens has steadily declined. 
Despite a certain degree of progress in matters of centralization, administration, and 
control, and despite utterances of educational theorists and court decisions to the con- 
trary, schools in the United States continue to be in fact local institutions, dominated 
by the traditions and policies of district and town systems. These traditions have 
proven stronger than laws and judicial findings. Our schools have not only never 
ceased to be from the standpoint of support local institutions, but they have tended to 
become more and more so with each decade of our national history. It is true that the 
State directs the people of each community to maintain a school, but having done this, 
it says in effect: "Whether you maintain a good, a poor, or a thoroughly worthless 
school is largely a question to be decided by you. " 

Ever since Connecticut nearly ruined her schools (1801-1840) by attempting to 
support them entirely from the proceeds of her permanent school fund, local support 
has steadily gained favor both in theory and in practice until it has become little less 
than a fetish. The suggestion that the State levy a school tax sufficient to pay for the 
major part of school costs would to-day meet with violent opposition in nearly every 
State in the Union. Nevertheless, the fact remains that the local units upon which 
the burden is now placed are so unequal in wealth, and consequently in their ability 
to finance schools, that it is the height of absurdity to expect them to offer educational 
opportunities approaching any degree of equality. In the year 1914-15 counties in 
Colorado varied in wealth all the way from $22,000 to $1,800 per school child. It is 
evident that these differences, so far as financial ability is concerned, represent differ- 
ences in ability to provide school facilities. Even greater inequalities exist among 
the local units, i. e., school districts. Thus in Conejos County the valuation per child 
varied from $617 (district 29) to $26,500 (district 15). 

Similar conditions are to be found in varying degrees in every State in the Union. 
We must, however, be content with presenting the facts for three States, Massachu- 
setts, New York, and Colorado. 

Table 17 shows how widely the 63 counties composing Colorado varied with respect 
to their financial ability to support schools, the aid they received from the State, and 
the per cent of their total support derived from the State the county, and the district. 

88213°— 22 3 



14 



STATE POLICIES IN PUBLIC SCHOOL FINANCE. 



Table 17. 



-Comparison of the financial ability and school burdens of certain selected 
counties in Colorado, 1914-15. 



Counties. 



"Washington 

Larimer 

Alamosa 

Hypothetical median . 

Pitkin 

El Paso 

Eagle 

Cheyenne 

Park 



Valuation of 
county per 
school child 
6-21.1 



Amount. 



SI, 822 
3, 516 
4, 4.50 
5, 057 



5,615 
6, 003 
7,291 
9, 542 
22,674 



Rank. 



General 
county 
school taxi 
in mills 
(county 
high- 
school 
tax in- 
cluded) .2 



Received from 
State fund. 



2.00 
1.25 
1.10 
l.GO 
U.QO 
1.50 
1.74 
.60 
1.66 



Per 
child in 
average 
daily 
attend- 
ance.! 



e) 



5.46 
3.51 
3.66 
3.67 
3. .38 
3.65 
3.80 
3.07 
a 61 



Per 

teacher 

emplov- 

ed.i" 



349 
40 
81 
65 

[■65 
72 
78 
43 
30 
27 



Per cent &f total school 
support received 
from— 3 



State. 



12 
14 
8 
6 
i7.3 
5 
5 
6 
4 
3 



'ounty. 



27 
9 
19 
15 

6 17 

19 
27 
12 
17 
31 



Dis^ 
trict. 



61 

87 
73 
79 
!>76.2 
76 
68 
82 
79 
66 



1 U. S. Bu. of Educ, Bui., 1917, No. 5, p. 37, Table 15. 

2 Ibid., p. 43, Table 23. 

3 Ibid., pp. 3.5-36, Table 14. 



■• Data unavailable; see ibid., p. 38. 

^ Computed. 

8 Median in valuation, as wiU be evident from rank. 



From Table 17, we see that Park County, whose valuation per school child is over 
$22,000, receives more State aid per child than Cheyenne, Pitkin, or Larimer County, 
each of which has a far lower valuation and whose local tax is higher. Moreover, 
Park County, which is approximately four times as rich as Pitkin County, levies a 
county tax only eight-fifteenths as great, and whereas Park County receives from the 
State $3.61 per child, Pitkin receives only $3.38. Baca, the poorest of all counties, 
levies the highest county tax; yet of the counties selected, four, Alamosa, Pitkin, El 
Paso, and Larimer, receive much larger quotas from the State per teacher employed. 

The inequalities resulting from Colorado's present system of school support are 
even more evident when we compare district with district than when we compare 
county with county. Table 18 shows the wide variation existing between certain 
districts in Conejos and Otero Counties. 

Table 18. — A comparison of financial ability and distribution of school burdens in two 
counties (Conejos and Otero) of Colorado, 1914-15. 





Rank 
in val- 
uation. 


'Valuation 

of dis- 
trict per 
census 
child.i 


Received from 
State fluids. 


District 
tax in 
mills. 3 


Per cent of total support 
received from— 


Counties and districts. 


Per 
child in 
average 
daily 
attend- 
ance. 


Per 
teacher 
employ- 

ed.2" 


State. 


County. 


Dis- 
trict. 


Conejos County (27 districts):"' 
29 


1 

7 


$617 
1,234 
2,072 
2,072 
6,117 
26,545 

3,374r 

.5,752 
7,475 
9 7,792 
8,109 
10,227 
21, 544 


S9.24 
5.65 
3.49 
4.38 
2.93 
3.69 

3.08 
2.42 
5.32 
2.95 
2.91 
2. 98 
3.08 


S171 
181 
93 
98 
32 
59 

68 

81 

60 

65.50 

77 

67 

64 


7.00 
1.06 
3.20 
3. 07 
2.02 
.68 

6.5 
2.1 
2.7 
2. ,55 

2.7 
2.6 
2.0 


21 
26 
15 
14 

9 

7 

5 
2 
6 

7.1 

7 
7 
5 


35 

47 

24.3 

24 

16 

12 

10 

4 
11 

12.5 
14 
13 

9 


44 


26 


27 




61 5 


147.... 


14 
21 
27 

1 
6 

ni 


62 


16 


75 


15 . . 


81 


Otero County (22 districts) :' 
11 


85 


29 


94 


238. 


83 


Median ' 


81 6 


98 


12 
17 
22 


79 


20 


80 


13 


86 







1 U. S. Bu. of Educ, Bui., 1917, No. 5, p. 39, Table 18. 

2 Ibid., p. 40, Table 20. 
« Ibid., p. 42, Table 22. 
< Ibid., p. 41, Table 21. 

5 The numbers by which the districts are named exceed the number of districts reported, 
Otero County only 22 districts are reported, but the sixth in rank is district 29. 

6 Computed. 

7 Median in valuation, as is evident from rank. 

8 The median lies between the two districts 22 and 9. 

9 A hypothetical district, included to indicate median valuation. 



;., in 



EVILS FROM LOCIAL SUPPORT. 



15 



From Table 18 it is evident that in Conejos County, district No. 29; whose val- 
uation per child is just half that of district No. 26, taxes itself nearly seven times as 
much, receives 5 per cent less State aid, and 12 per cent less county aid, and furnishes 
from district revenues 17 per cent more. District- 15, whose valuation per child is 
more than four times that of district 16, receives from the State $27 more per teacher 
employed and $0.76 more per child in attendance. District 16 levies a tax of 2.02 
mills, whereas district 15 levies a tax of only 0.68 mills, yet the latter district's val- 
uation is so much greater that she derives per cent more of her total school moneys 
from district revenue than does district 16. Similar conditions exist in Otero County, 
as will be readily seen by comparing district 29 with 23, or 23 with 9, or 20 with 13. 
Flagrant inequalities in educational opportunity are inevitable in a State where the 
schools depend for their support upon units so unequal in wealth and where the 
method of apportioning State aid is such as to exclude any recognition of these in- 
equalities. This expectation is amply borne out by the facts presented in Table 19. 
This table, based upon a recent study covering a period of eight years, is much more 
significant than a table presenting conditions in a single year. 

Table 19. — County inequalities of educational opportunity in Colorado. 



Item I — EnTollmeDt. 



Item II — School year. 



County. 



RaoLk.s 



Name. 



Children not 
enrolled. 1 



County. 



Per 

cent. 



Num- 
ber. 



Rank.'' 



Name. 



Length 
of year. 



Sedgwick 
Kiowa . . . 
El Paso.. 
Elbert . . . 
Baca 



46 
117 

4S3 
4.55 
278 



Crowley 

Cheyenne.. . 

I Douglas 
Jackson 
Las Animas 
Pueblo 

Montezuma 
Baca 



167 
151 
141 
141 
141 
141 
133 



Item III — Teachers'salaries. 


•Item IV — Expenditure per child. 


County. 


Teachers' 
average 

monthly 
salary. li 


County. 


Annual ex- 
penditure 


Rank.3 


Name. 


Rank.7 


Name. 


per child 
enrolled.* 


1 




$81.00 
64.50 
59.00 
53. .50 
39. 00 


1 

16 
31 
46 
62 


San Juan 


$77. 31 


15 


Otero 


San Miguel 

Moffat 

Routt 

CostiUa 


50.45 


28 


Bent 


40.42 


45 
60 


Kiowa 

Washington 


33.65 
21. 39 



1 Ssjrgeant, C. G. Rural and Village Schools of Colorado, p. 14, Table 2, per cents computed. 

2 Ibid., p. 4rl, Table 9. 

3 Based on reports of 60 counties. Ranks computed; an eight-year average, 1906-1913. 
♦Based on reports of 61 counties. Ranks computed; an eight-year average, 1906-1913. 

5 These four counties fall in the same rank, having the same length of terra in days. 

6 Ibid., p. 56, Table 13. 

' Based on reports of 62 counties. Ranks computed; data for the year 1914-15. 
» Rep. of Colo. Sch. System, p. 60, Table 34. (Bu. of Educ, Bui. 1917, No. 5.) 

Table 19 shows us that during the eight years from 1906 to 1913 the proportion of 
children not enrolled in school varied aril the way fi'om 7 to 41 per cent, the school year 
from 98 to 167 days, teachers' average monthly salary from $39 to S81, and the expend- 
iture per child from $21 to |77. In a large number of States the school inequalities 
are far worse than in Colorado. A complete statement would necessitate an intensive 
survey of each of the 49 unite constituting the Union. We will confine further consid- 
eration to certain phases of the school situation in Massachusetts and New York. 



16 



STATE POLICIES IJST PUBLIC SCHOOL FUTAITCE. 



The local units in Massachusetts are cities and towns. For purposes of school admin- 
istration and support, these units are divided into four classes as follows: 

Class I, including 38 cities; 

Class II, including 75 towns, "population 5,000 or over; 

Class III, 116 towns, population less than 5,000 which maintain a high school; 

Class IV, 125 towns, population less than 5,000 which do not maintain a high school. 
In 1918 the average length of the school year in Massachusetts varied from 194 days 
(9 months and 2 weeks) in Brockton to 144 days (7 months and 2 days) in Peru. The 
average length of the school year for the 38 cities included in Group I was 176 days. 
Within this group the year varied from 194 days in Brockton to 158 days in Somerville. 
In other words, a child living in Somerville would have been excluded from school 
over 7 v\^eeks (36 days) during which a child in Brockton would have been able to go 
to school. Table 20 presents a comparison of the length of the school year of Brockton 
with that of the six cities in Class I which maintain the shortest school year. 

Table 20. — Inequalities in length of school year in Massachusetts, 1918^ 



Cities. 



Length 

of 
school 
year, 

in 
days. 



Comparison ■with 
Brockton. 



Num- 
ber of 
days 
less. 



Number less 
of— 



Weeks. Days 



Brockton . 

Lynn 

Revere 

Medford... 
Pittsfield.. 
Peabody . . 
Somerville 



194 
165 

163 

160 
158 



29 



1 Table 20 based upon Mass. Statistics of Pub. Schs., 1917-lS. 

In Table 21 a comparison is presented of a group of New York rural one-teacher 
schooll districts all located in the same town. The advantage of such a comparison is 
that the conditions are probably as approximately equal as could be found when 
viewed from the standpoint of the burdens of maintenance and of the educational 
standards which ought to be met. 

Table 21. — Comparison of financial ability,^ effort,'^ and State aid of seven one-teacher 
rural school districts in town of Andover, N. Y.'^ 



District No. 


Enroll- 
ment. 


As- 
sessed 
valua- 
tion per 
child 
en- 
roUed.'' 


Total 
assessed 
valuation. 


Tax 
rate. 


Cost 
per 
child 
en- 
rolled. 


Total 
ex- 
pended. 


Total 
State 
aid. 


State 

aid 

Pfr 
child 

en- 
rolled.'' 


9 


13 
13 
22 
11 
17 
27 
21 


S5, 555 
4,901 
4,211 
2,620 
1,787 
1,750 
1,476 


S72, 209 
63, 718 
92, 640 
28, 820 
30,386 
47,245 
31,000 


SO. 00387 
.00517 
.00328 
.00867 
. 00987 
.00618 
. 00750 


!s35. 00 
38. Oi 
19.41 
41.03 
28.39 
15.88 
20.89 


8454. 95 
495. 51 
428. 11 
451.37 
482.65 
428.84 
438. 79 


$125 
125 
135 
185 
185 
150 
185 


$9.61 


7 


9.61 


6 


6.13 


5 


16.81 


2 . 


10.93 


3 


5.55 


4 


8.80 







1 1, e., assessed valuation, not as accurate as measure of abiUty as true valuation. 
2 1, e., tax rate and expenditure. 

3 Table 21 is taken from an unpublished study by Richard A. Graves, graduate student in education, 
Univ. of Minn., based upon N. Y. Educ. Dept. Rep., 1917, vol. 2, pp. 681-684. 
■' Computed. 



SCHOOL REVENUES AND NATIONAL AIB. 17 

The districts in Table 21 are arranged in order of their assessed valuation per child 
enrolled. It is evident that in the case of one-teacher districts, the maximum en- 
rollment of which does not exceed 27, the cost of maintenance need vary but little, 
since the important items of expense, such as teacher's salary, fuel, and insurance, 
are identical. This inference finds support in the data presented, where the total 
expenditure varies only from |428 to $495, a difference of less than $70. In total 
assessed valuation these seven districts vary from $92,000 (district No. 6) to $28,000 
(district No. 5). District No. 2, which ranks next to lowest in wealth, ranks next to 
highest in total expenditure, and levies the heaviest school tax of all. The wealthiest 
district, No. 6, levies the lowest tax and spends the least money on its schools. This 
can not be excused on the ground that its school is small. For in point of fact. No. 3 
is the only district which has a larger enrollment. It is unnecessary to carry further 
the consideration of the inequalities and injustices produced and perpetuated 
throughout the States in the Union by the existing systems of local support. Ptecog- 
nizing the situation as universal and varying only as to the degrees and forms in which 
it appears, we are forced to ask how these inequalities shall be remedied. 

State aid is commonly given either for fostering certain specified educational proj- 
ects, or is apportioned upon some general basis such as school census with a view of 
pro^'iding general relief. In the latter case there is often no regard for the comparative 
ability or effort of the units receiving the quota. Nevertheless, the principle that 
the State is the proper authority to even out educational inequalities has long been 
recognized by many of the States in their systems of State aid. Some few States, 
notably California and Colorado, have definitely taken this position. 

In 1913 Colorado created a minimum wage for teachers' fund (Session Laws, 1913, 
ch. 156) to be apportioned among districts unable to provide from all other available 
som'ces a sum sufficient to pay each teacher at least $50 per month for six months. 
California, by a constitutional amendment. No. 16, adopted in November, 1920, 
provided that the State must furnish $30 for each elementary and each high-school 
pupil in average daily attendance, thus practically doubling the former quotas of $15 
and $17.50 per pupil. Louisiana, by a recent constitutional amendment, has added 
1 mill to her rate of State school tax, by which it is estimated the proceeds will be 
increased by approximately $1,600,000. Texas, during the last two years, 1919 and 
1920, has repealed her former maximum of $4.50 of State apportionment, and has 
increased the amount to $14.50, and passed a rm-al-aid law doubling the former appro- 
priation of $2,000,000. To this group of California, Louisiana, and Texas might be 
added the names of several other States which either have provided, or at the present 
time are attempting to provide, appreciably larger State revenues for evening out 
inequalities. These attempts are due in some instances to a recognition of the prin- 
ciple just cited, in others merely to a realization of the need of vastly increased school 
revenues. When such a realization has been reached, the question at once follows, 
which of the contributing units shall be called upon to provide the increase, the local 
units, the State, or the Federal Government? Before attempting to answer this 
question, it will be well to consider from what sources our school moneys are drawn at 
the present time. 

III. SCHOOL REVENUES AND NATIONAL AID. 

Every State in the Union derives pubKc-school moneys to-day from the Federal 
Government, from the State, and from one or more classes of local units, such as 
districts, townships, and towns. To these must be added in some States the county 
or, as in Louisiana, the parish. In the following paragraphs funds will be classified 
according to the unit which provides and distributes them, even though they are 
raised under the authority of some higher unit. Thus a school tax required by law 
to be levied in every county will be regarded as a State tax, provided the proceeds 
are paid into the State treasury and redistributed in accordance with pohcies deter- 
mined by the State and upon some general basis which disregards their origin. On 
the other hand, a tax such as the 6-mill tax in Montana, required by State law to be 



18 



STATE POLICIES I]Sr PUBLIC SCHOOL EUsTAlMCE. 



levied by every county but the proceeds of which are distributed by and within the 
county frora which derived, will be regarded as a county tax, and as such does not 
lie within the scope of the present study. The major portion of State permanent school 
funds has been derived from lands and moneys granted by the Federal Government. 
Nevertheless, such funds are properly classed as State, since the title and control of 
the same rests with the individual States. It is not sufficient to classify funds merely 
on the basis of the units providing them, for we wish to know whether the funds are 
derived primarily from taxes, from endowments, or from other sources. Tables 22, 
23, and 24 show the different classes of funds from which Alabama, Colorado, and 
New York derive their revenue for schools. 

Table 22. — Sources of New York school revenues in 1918. 



Classes of sources. 


Federal. 


State. 


County. 


Town. 


District. 






United States de- 
posit fund;' 
common school 
fund; literature 
fund. 




Permanent 

to\\'n "gos- 
pel and 
school 
funds." 




and lands. 
II. School tax 




Bank tax . 


District tax. 


ni. Appropriations 


Smith -Hughes 
grant for voca- 
tional education. 


"Support of com- 
mon schools;" 
"support of 
academies and 














IV, Bonds 




academic 
departments;" 
attendanceof 
academic pupils; 
books, reproduc- 
tions of works of 
art, and appara- 
tus; teacher train- 
ing departments; 
teachers of physi- 
cal training. 






Bonds. 












Fines, tuition 


fines, tuition 
fees, etc. 










fees, gifts. 



1 Although regarded as a State fund and so classed in all States, this fund strictly speaking belongs to 
the Federal Government. 

Table 23. — Sources of Alabama school revenue, 1918. 



Classes of sources. 


Federal. 


State. 


County. 


District. 






16th section fund; 
school indemnity 
land fund; valueless 
sixteenth section 
fund; United States 
surplus revenue 
fund;i J. Wallace 
fund (Lawrence 
County). 

3-mill property tax 

General, $161,500; 
county tax bonuses, 
Sl,000-S3,000 per 
county ; rural build- 
ing, $2,000 per coun- 
ty; county high 
school, S3 ,000 per 
school ; libraries , $100 
per county to match 
Smith-Hughes grant. 

General Education 
Board; Anna T. 
Jeanes; John F. 
Slater; Phelps- 
Stokes ;Ilosenwald. 

Escheats; teachers' 
examination fees. 






and funds, 
n. Tax 




1-3 mill tax; poll 
tax; dog tax. 


Not reported sep- 
arately, 20 dis- 
tricts in 16 
counties. 

City. 


III. Appropriations 

IV. Private funds 2 


Smith-Hughes 






V. Miscellaneous 






Students' fees; 








patrons' supple- 
ments. 



1 See footnote to Table 22. 



2 Placed under State because grants benefit entire State. 



SCHOOL REVENUES AND NATIONAL, AIB. 
Table 24. — Sources of Colorado school revenues, 1919. 



19 



Classes of sources. 


Federal. 


State. 


County. 


District. 




National forest 
reserve fund. 

Smith -Hughes 
grants. 

Fire fines 


Public school fund 






and lands. 
Appropriations 

Fines and forfei- 


$10,000 annioally to ad- 
minister Smith- 
Hughes work; appro- 
priations to match 
Smith -Hughes 
grants. 

Mining; State report 
publishing. 






For 21 different 
offenses. 

County high 
school.' 

2.5 mills general 

county school 

tax; 4-mill high 

school tax; spe- 

' cial bond tax. 


Truancy fines; 


tures. 
Bonds 




building fines. 
District bonds. 


School tax 






Special school tax; 








bond tax; high- 
school tax; 
teachers' retire- 
ment-fund tax. 



1 For raising moneys for erecting and furnishing school buildings, for purchasing grounds, or for funding 
floating debts. 

No percentage analysis of the receipts of the three States presented in Tables 22 to 
24 is necessary to convince us that fines, gifts, and tuition fees are relatively unimpor- 
tant sources of school revenue. New York and Colorado are alike in that they both 
draw the largest proportion of their local revenues from district taxes and bonds. In 
Alabama, on the other hand, the proceeds of district taxes are not reported separately, 
a fact in itself suggestive of their minor importance, and a fact which is further 
borne out by Table 5, which indicated that approximately 64 per cent of school 
revenue is derived from the State. In both Colorado and Alabama the county is 
utilized for purposes of school taxation. Bank taxes are the only county source in 
New York State. The Smith-Hughes fund in New York and the Federal forest 
reserve in Colorado are typical Federal sources. In each of these three States, State 
sources include permanent funds and appropriations. Alabama is the only one of 
the three which levies a State school tax. The surplus revenue fund in Alabama 
and the sixteenth section fund are both of Federal origin, but they are commonly 
regarded not only in Alabama, but in all States possessing them, as State funds, as the 
Federal Government exercises no control over their investment or use. The title 
to the sixteenth section fund is vested in the State, the surplus revenue fund belongs 
to the Federal Government, being merely a loan to the States. The Federal forest 
reserve and the Smith-Hughes are two important Federal sources of school revenue. 
Both belong to the Federal Government. From this survey of typical existing 
sources, of school revenue, in individual States, we may return to the question, which 
class of sources, local, State, or Federal, ought to furnish the large additional revenues 
which our present educational crisis demands. 

We may discredit the wisdom of attempting to solve om- problem by placing addi- 
tional and vastly heavier burdens upon local school units by recalling what has been 
stated in various preceding paragraphs regarding the disastrous results of this policy 
and the inevitable ill results of carrying it still further. There remain for us then 
only two possible groups of sources. State and National. 

NATIONAL AID. 

A previous paragraph has noted that every State in the Union now receives aid 
from the Federal Smith-Hughes fund. Attention has been called also to certain other 
Federal funds. From the standpoint of Federal aid, California is of more than usual 
interest, owing to the fact that it derives school revenue from no less than foiu- Federal 
funds, as will be seen from Table 25. 



20 STATE POLICIES IN PUBLIC SCHOOL FINANCE. 

Table 25. — Federal moneys paid to California for jiublic schools} 



Federal fund. 


Amount. 


Units receiving. 


How expended. 




$8,568 

16, 721 
54, 491 


State 


Added to principal of perpetual school 




.do 


fund. 
Vocational education. 






Added to unapportioned county 




Districts 


school fund. 
For tuition of Indian children. 






Total' 


79, 780 









1 Data taken from an unpublished study by the author. Public School Finance in California. Data for 
the year 1917-18. 

2 Not reported. 

s Not including tuition for Indian children. 

FEDERAL LAND GRANTS. 

On May 20, 1785, Congress adopted its famous ordinance providing for the manner 
of surveying and selling Government land. This ordinance reserved the section 
numbered 16 in every congressional township for the support of schools. It was 
this ordinance which established a precedent that marks the beginning of a policy 
which still continues, and which resulted in providing generous endowments of 
Federal- lands for comm-on schools in every one of the 30 States carved out of the 
Federal domain. The 18 remaining States and the District of Columbia contained 
no Federal lands and consequently received no township school grants. 

Some Federal lands granted to the States have been given specifically for public 
schools; others, such as swamp lands, salt lands, and internal improvement lands, 
although not given specifically for schools, were granted under terms which made it 
possible to devote them to permanent State school funds, and many a State has done 
so. Every public land State admitted prior to California, 1850, received from the 
National Government for the support of public schools section 16. California and 
every subsequently admitted State, except Utah, Arizona, and New Mexico, re- 
ceived sections 16 and 36. These three last-named States received sections 2 and 32, 
as well as 16 and 36. In addition to township school lands aggregating approximately 
94,000,000 acres, Congress has granted to public land States under separate acts 500,000 
acres each of public domain to be used for purposes of internal improvement, salt 
lands aggregating over a half million of acres, and swamp lands aggregating over 
64,000,000 acres. 

FEDERAL MONEY GRANTS. 

The most important grants of money made by the Federal Government to the 
States which have been used for the support of public schools include: (1) The United 
States surplus revenue loan of 1837; (2) per centum grants; (3) moneys given in lieu 
of school lands, as in the case of Indian Territory, which received $5,000,000 when 
admitted into the Union as a part of Oklahoma; (4) income from Federal forest reserva- 
tions; (5) Smith-Hughes subventions for vocational education. 

Per centum grants or funds have their origin in the policy adopted by Congress as 
early as the admission of Ohio in 1802, of granting to public land States a certain per 
cent of the proceeds of the sales of lands belonging to the United States, sold after the 
State's admission into the Union. The proportion granted has varied all the way from 
2 to 15 per cent. California, Iowa, Kansas, Montana, Nebraska, Nevada, North 
Dakota, Oregon, South Dakota, Washington, Wisconsin, and Wyoming by their con- 
stitutions have devoted their per centum funds to the State's public school endow- 
ment fund. 

In 1837 Congress distributed among the 26 States then constituting the Union the 
so-called surplus revenue loan fund, or United States deposit fund. This fund con- 



SCHOOL REVEIsrTJES AND NATIONAL AID; 21 

sisted of 28 millions of dollars which had accumulated as a surplus in the National 
treasury. Although the amounts distributed to the States were technically loans, is 
was assumed that the Federal Government would never recall them. Only 4 States, 
Michigan, Mississippi, South Carolina, and Virginia, appropriated no portion of this 
grant to education. Alabama, Delaware, Louisiana, Missouri, and New York set 
apart all of their respective quotas as separate school funds, or united them with 
permanent school endowments already existing. The remaining 17 States devoted a 
portion of their quotas to public schools. 

Chapter 192 of the act of Congress, May 23, 1908, provides that thereafter 25 per cent 
of all the moneys received fi'om each Federal forest reserve during any fiscal year shall 
be paid to the State or Territory in which said reserve is situated, to be expended as 
the State or Territorial legislature may prescribe for the benefit of public schools and 
public roads of the county or counties in which the forest reserve is situated. Twenty- 
seven States contain Federal forest reservations, the aggregate area of which in 1920 
amounted to over 135,000,000 acres. ^ It will be seen that the forest reserve fund is 
not granted for the States but for the counties within the State in which such reserva- 
tions are situated. It rests with the State to determine what portion of the proceeds 
shall be devoted to schools. Colorado may be taken as an example. This State con- 
tains 63 counties, 42 of which contain portions of the national forest reserve. By an 
act passed in 1909 Colorado provided that the Federal forest reserve moneys shall be 
apportioned semiannually among the counties containing Federal reservations in 
proportion to the area of the forest reserve contained in each. "Not less than 5 per 
cent of the said proceeds shall be expended for either roads or public school fund in 
the discretion of the county commission." 

In addition to the grants of money already mentioned several others of minor 
importance have been provided, e. g., proceeds of fines for trespassing upon Federal 
lands, moneys paid as reimbursements to the States for war claims and war taxes. 
None of the money grants thus far described is available to all States; nor does any one 
of them represent an attempt of a vital sort to further a definite educational project. 
The passage on February 23, 1917, of the Smith-Hughes vocational education law 
marked the entrance upon an entirely new Federal school financial policy. Hei'e we 
have the attempt to provide liberal annual Federal grants for fostering a definite 
project, vocational education. Moneys are provided for maintaining not only trade 
and industrial studies in the public schools, but for providing training for teachers 
of these subjects. The Smith-Hughes grant is significant not only for these reasons, 
but because through the machinery it established and through the conditions it 
attached to the receiving of the quotas disbursed, it was able to direct if not to dictate 
policies, equipment, methods, and teaching qualifications in the field of vocational 
education in secondary schools. 

It was inevitable that the granting of Federal aid to teacher- training institutions and 
to secondary schools would soon lead to the question whether the Federal Goverimient 
ought not to grant assistance to the States in their efforts to meet the mounting costs 
in other educational fields, notably in that of elementary education. Out of a strong- 
conviction in the aflfirmative arose the Smith-Towner bill, which embodied pro- 
visions for a most marked enlargement of Federal aid to public schools. Indeed, it 
marked such a departure that before entering upon a statement of its provisions, it will 
be well to summarize our account of Federal aid thus far given. Such a summary can 
be most concisely presented in tabular form. Table 26 shows the most important 
Federal land grants which have been used by the States in toto or in part for schools. 
Table 27 makes a similar presentation of Federal money grants. 

1 156,032,053 acres if Alaska be included. 
88213°— 22 4 



22 STATE POLICIES IF PUBLIC SCHOOL FIITAIS'CE. 

Table 26. — Federal lands available for public schools. 



Grants. 



Area in thousands 
of— 



Acres. 1 



Square 
miles.s 



I. Township school lands (sixteenth, thirty-sixth, second, and thirty-second sec- 
tions) 

II. Lands available for schools at State's option: 

Internal improvement , 

Salt lands 

Swamp lands 

Total 

Grand total , 



94, 164 



11,469 

606 

64, 651 



17 

0. 

101 



76, 726 



119 



170, 890 



1 Compiled from data furnished by the General Land OfiBce, Department of Interior, April 6, 1921. 

2 Computed. 

Analysis.— (1) The following States received no land grants from the Federal Government: (a) the 13 
original States — Connecticut, Delaware, Georgia, Maryland, Massachusetts, New Hampshire, New Jersey, 
New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, and Virginia; (6) Vermont, 
Kentucky, Maine, "West Virginia, and Texas. 

(2) Thirteen States received section 16 in each township— Alabama, Arkansas, Florida, Illinois, Indiana, 
Iowa, Louisiana, Michigan, Mississippi, Missouri, Ohio, Tennessee (a special case), and Wisconsin. 

(3) Fourteen States received sections 16 and 36 — California, Colorado, Idaho, Kansas, Minnesota, Montana, 
Nebraska, Nevada, North Dakota, Oklahoma, Oregon, South Dakota, Washington, and Wyoming. 

(4) Three States received sections 2, 16, 32, and 36 — Arizona, New Mexico, and Utah. 

Table 27. — Federal money grants. 



Fund or source. 



I. Moneys granted (all or iu part) specifically for 
schools: 

1. Smith-Hughes grants 

2. Federal forest reserve income 

3. Moneys given in lieu of school lands 

4. Special appropriations 

II. Moneys available for schools at State's option: 
1.' Surplus revenue loan of 1837 

2. Per centum grants 

3. Federal land fines 



Available to — 



All States. 

States containing such reservations. 

Bureau of Education; tuition of Indian children in 
pubUe schools; education in Alaska and District of 
Columbia. 

Twenty-eight States (all States then included in the 

Union). 
All States containing Federal lands. 
Do. 



Table 28 shoves the Smith-Hughes grants provided annually and the uses of the same. 
It should be borne in mind that the amounts granted for teacher training and for 
salaries are available for a distribution among all the States only as reimbursements. 
Before a State receives its allotment, it must have spent in advance twice the sum 
indicated in Table 28, whereupon it will be paid out of the Federal fund a sum equal 
to one-half of the total expenditure. Needless to say, a considerable proportion of 
the grant available in the first year of its distribution, 1918, was not called for. 



STA31E SOUECES OF SCHOOL EEVE3>irU]|. 

Table 2-8. — Smith-JJughes Federal vocational education grants.^ 
(All numbers (not yeaxs) indicate millions or decimals b/" milUoTis of dollars.) 



23 





Total 
grant. 


Distribution of totai grant. 


- 


To the States. 




Fiscal year ending June 30. 


For salaries of 
teachers, super- 
visors, and direct- 
ors of — 


For 
teacher 
train- 
ing. 


ToFed- 

-eral 

Board 

of Voca- 


• 


Agricul- 
tiure. 


Home 
econom- 
ics, trade, 
and in- 
dustrial 
subjects. 


tional 
Educa- 
tion. 


1918 


1.8 
2.5 
3.1 
3.-8 
4.3 
4.8 
5.3 
6.3 
7.3 
7.3 


0.5 
.8 
1.0 
1.2 
1.5 
1.7 
2.0 
2.5 
3.0 
3.0 

(2) 


0.6 
.8 
1.0 
1.3 
1.5 
1.8 
2.0 
2.5 
3.0 
3.0 


0.5 
.7 
.9 
1,1 
1.1 
1.1 
1.1 
1.1 
1.1 
l.l 


0.2 


1919 . 


.2 


1920 


.2 


1921 


.2 


1922 . 


.2 


1923 . . 


.2 


1924 . . 


.2 


1925 - 


.2 


1926 


.2 


Annually thereafter 


.2 













1 Data taken from Bui. No. 1, Fed. Sd. for Voca. Educ, 1917, p. 62. 
3 Rural population. 
' Urban population. 
* Total population. 

The Smith-Towner bill was introduced into the United States Senate October 10, 
1918, by Senator Hoke Smith, oi Georgia. This bill attempted to place upon the 
Federal Government the responsibility of evening out the educational inequalities 
existing among the States by reason of theii" inequalities in financial resources, differ- 
ences in educational history, and in standaa-ds. It recognized that the Nation was 
confronted with an unprecedented or at least a heretofore unrecognized problem. 
It provided for an annual grant from the Federal Government of $100,000,000 for (1) 
equalizing educational opportunities, (2) reducing illiteracy, (3) Americanization, 
(4) teacher training, (5) physical education and recreation. In each case, as in the 
Smith-Hughes gt-ants, the amount furnished by the National Government was to be 
matched by the State. The Smitli-Towner bill failed of passage by the last Congress. 
It has been succeeded by the Towner-Sterling bill, which attempts to -embody in 
revised form the major aims and principles of the Smith-Towner bill. The fate of 
the Towner-Sterling bill rests with the present Congress. 



IV. EXISTING AND POTENTIAL STATE SOURCES OF 
SCHOOL REVENUE. 

As might be expected, the States vary both as to the sources employed to furnish 
school revenues and as to disposition made of the revenues which such sources produce. 
Thus in some States the proceeds of escheats and certain fines are added to the princi- 
pal of the permanerrt, State school fund. In other States these proceeds are made a 
part of the current school revenue. The present chapter is concerned primarily with 
those sources which are employed to produce current revenue. The most satisfactory 
means of answering the question, what State sources are being thus employed at the 
present time, istomake a study of individual States. Table 29, which follows, answers 
this question for 9 States. 



24 



STATS POLICIES IN PUBLIC SCHOOL FINANCE. 





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STATE SOURCES OF SCHOOL EEVENUBi. 



25 



Sources of school revenue the proceeds of which are set aside by law for increasing 
the principal of State permanent school funds do not appear in Table 29, the aim of 
which is to present sources of current revenue. Consequently, escheats, which in 
Colorado are added to the permanent fund, are not mentioned, but they are indicated 
as sources of revenue in Alabama and California, in which States they are distributed 
as part of the annual current revenue. 

Every one of the 9 States included in Table 29 derives school revenue from perma- 
nent funds and from State appropriations, 6 from State taxes. Massachusetts is of 
especial interest, owing to her recently adopted policy of devoting the proceeds of a 
State income tax to schools; New Jersey, also, because of her railroad tax for schools. 
Illinois, Colorado, and New York derive no revenue directly from any State tax. 
although a considerable portion of the revenue which reaches the schools through 
appropriations is undoubtedly derived from taxation. Peculiar interest attaches to 
Illinois because this State has substituted legislative appropriations for the State 
school tax required by her constitution. These three classes of funds, appropriations, 
taxes, and permanent school funds, exceed all others in importance. Indeed, were 
it possible to carry the study further, it would be discovered that the three remaining 
general classes of State school revenues contribute relatively so little as to make them 
of practically negligible importance. Data at hand show the truth of the statement 
for two widely separated and, in many other respects as well, exceedingly different 
States, Vermont and California. 

Table 30 shows in millions of dollars the decennial State school fund of California, 
and the per cent of the fund furnished during a 10-year period by the sources named. 
As already explained, the term "State school fund" is used in California to designate 
the total annual State school revenue provided for elementary schools. Table 31 
presents a similar analysis of State sources of school revenue in Vermont for one year. 

Table 30. — Relative importance of sources contributing to California decennial State 

school fund, 1909-1918} 



Sources. 



Amount 

(millions of 

dollars). 



Per cent 
of total 
fund. 



Perpetual school fund income 

Tax proceeds (property, poll, inheritance) 

Appropriations (largely derived from corporation tax) 

Balances and uncanceled warrants 

Miscellaneous — fines, escheats, etc 

Total State decennial school fund 



3 

18 
30 

8 

0.04 



5.08 

30.50 

50.83 

13. 53 

.06 



100.00 
99.12 



1 Taken from an unpublished study by the author. 

Table 31. — Vermont State sources of school revenue, 1918} 



Sources. 


Amount. 


Per cent 
of total 

State 
revenue. 




$220, 000 

60, 000 

2,620 

45 

1,460 

252; 335 


41.01 




11.19 


Peddlers' license fees - - 


0.49 




0.0 


Circus license fees ... 


0.27 




47.04 








Total 


536, 460 


100. 00 







1 Taken from an unpublished study by Richard A. Graves, graduate student in education, University 
of Mimiesota . 



26 STATE POLICIES IK PUBLIC SCHOOL PINANCE. 

From Table 31 we see that in Vermont in the yeax 1918 practically 88 per cent of 
school revenue furnislied by the State was derived from State school taxes and 
appropriations; that these two sources, with the permanent school fund, con- 
tributed over 99 per cent of the State school revenues. The data in Table 30 are more 
significant owing to the fact that they cover a period of 10 years. Here we discover 
that, of the total amount paid by the State to public schools during this period, 50 
per cent was derived from appropriations, 30 per cent from taxation, and that these 
two sources together with the perpetual school fund furnished 85 per cent of the total 
10-year fund. Of the remaining 15 per cent, more than 13 per cent consisted of the 
proceeds of balances and uncanceled warrants, which do not represent any real additions. 
Moreover, the major proportions of the funds derived firom these two sources just 
named originated in taxation and appropriations. From this preliminary discussion 
of various types of State school funds and their relative importance, we may now turn 
to a somewhat more detailed consideration of these three which we have discovered 
to be of supreme importance, namely, permanent funds, taxation, and appropriations. 

PERMANENT SCHOOL FUNDS. 

Of all sources of State aid, permanent school funds are the oldest and have been 
most universally employed, whereas only 20 States at the present time levy a mill tax 
for general educational purposes, and several until very recently have pursued no 
policy of State appropriations. Every one of the 49 units constituting the Union, with 
the exception of the District of Columbia and Georgia, possesses one or more perma- 
nent public school endowments, or maintains in lieu of such endowments permanent 
State accounts or debts, and pays interest thereon to the schools of the State. In view 
of these facts, it is fitting that the discussion of State sources of school support should 
begin with permanent school funds. We will consider first the present condition of 
these funds, and then the possibiUty of depending upon public endowments for meet- 
ing our present and futm-e financial difficulties. 

In any account of permanent school funds as sources of school revenue, a very sharp 
line should be drawn between funds which exist only as State credits or debts and 
funds which are intact and which represent genuinely productive investments. Of 
the reasons for creating a perpetual public school endowment, none is more fundamen- 
tal than the desire to ease the financial burdens of successive generations. Credit 
funds not only fail to do this, but, since their so-called interest is commonly paid out 
of general State revenue, they often actually serve as a lever for increasing rather than 
relie\ing the public bm'den. Such funds ought no longer to be classed as permanent 
funds, but ought to be labeled frankly as fictitious. Instead of speaking of the per- 
manent fund of Illinois, Ohio, and Michigan, we ought to speak of their permanent 
school debts or their fictitious State school funds. To do so would clarify matters for 
all concerned. The only statements covering the permanent public school funds of 
all the States are those prepared by the Bureau of Education. The most recent of 
these available is that contained in Bulletin, 1920, No. 11. This bulletin (p. 119) 
reports permanent school funds for every one of the 48 States except Georgia and 
South Carolina. In the bureau's statement for the year 1916 attention was called to 
the fact that the permanent funds of Michigan and Tennessee existed only as credits 
on the books of the State (Commis. of Educ, Rep., 1917, vol. 2, p. 83, footnote 4), 
but the bureau's 1918 statement makes no reference to this condition with respect to 
the fund of any State. The real facts in the case are that in no less than one-third of 
the States the funds reported as permanent school funds are totally or largely mere 
fictions. In some States funds once accumulated have been diverted or lost. Other 
States, such as Michigan, Maine, and Ohio, have by legislation adopted a definite 
policy of using for their own purposes all moneys paid into the State treasury to the 
credit of the fund, and establishing a State debt on which the Commonwealth binds 



STATE SOURCES OF SCHOOL EEVENTJvE. 27 

itself ito pay interest at a fixed rate to the public schools. Fifteen per cent of the per- 
manent school fund of Nevada, 18 per cent of the permanent school fund of California, 
and the same proportion of the school fund of Delaware is "invested " in irredeemable 
State bonds; 32 per cent of the Vermont permanent school fund, and the same per 
cent of the Wisconsin school fund, exists only as a State debt. All of Louisiana's 
United States deposit fund, and 58 per cent of her free school fund, are permanent 
State debts recognized as such by her constitution. Kentucky's permanent school 
fund is entirely a State debt except 4 per cent of the same, consisting of 798 shares 
of State bank stock. The principal of the so-called permanent State school fund is 
entirely a State debt in the following 9 States: Alabama, Arkansas, Illinois, Maine, 
Michigan, Mississippi, N-ew Hampshire, Ohio, and Tennessee. It should be noted 
at tliis point that all of the sixteenth section fimd in Illinois, and in Mississippi that 
portion of the sixteenth section fund belonging to the Chocktaw Counties, was used 
to establish local, not State funds, and is to-day largely intact. The true condition 
of the State permanent school endowments in the 16 States already referred to, whose 
funds are entirely or in part credit funds, is shown by Table 32, which follows. 



28 



STATE POLICIES 1:N PUBLIC SCHOOL PII^ANCE. 



^4= 



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gft 



ftO 



a si 



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M a 



S g 



STATE SOURCES OF SCHOOL REVENUB. 



29 



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STATE POLICIES I^ .PUBXJG SCHOOL FI]Sr.A]SrCE. 



It is evident from Taljle 32 that many of the funds annually reported as permanent 
public school funds should be eiscluded fi'om any statement which aims to show what 
relief the Nation derives from public school endowments. Table 33 shows the con- 
dition of the permanent school fund of those 37 States wliich possess produ^ctive funds, 
as reported in the latest statement issued by the Bureau of Education, iliams 
possesses no State productive permanent school fund strictly speaking. Nevertheless, 
she has township permanent funds, the aggregate value of wMch is approximately 
119,000,000. In view of the faet that these township funds were derived from six-, 
teenth section lands, the source of State endowments in many States, it would be 
ob\dously misleading to exclude Illinois from Table 33, although aheady included in 
Table 32. 

Table 33. — Productive public per^manent school funds, State and local, in 37 States,^ 

19MJ 





Value 


inmiHions of dollars. 


Annual income in 
thousands of dollars. 


Annual insome 
perpupilenrolled. 


States.3 


Present. 


Prospect ivfi. 


Amount. 


Rank. 


Amount. 


Rank. 




Amount. 


Raafli. 


Amount. 


Rank. 




.0.38 

K8.0)7.3 

4.9 

3. 

4(.94) .48 

.1.57 

«.54 

:21.04 

12.19 

4.8 

:9..96 

.41 
5.0 

.28.8 
14.39 
'6.63 
■9.4 

K2.4)2.« 
7.-8 

.m 

9.32 
6(1.3) .:90 
a9.3!6: 
21 .=0 ' 
i-6.!59 ; 
.40 
.25 
' .:06 
17.0 
81. 59 
.:3.-8 : 
l.« 
3. 23 . 
18.6 
1.0 
4.75 
1.'6 


^5 
14 
19 
24 
32 
28 
17 

3 

9 
20 
10 
33 
18 

2 

7 
15 
11 
25 
13 
51 
12 
30 

5 

4 
16 
•34 
S6 
37, 

•6 

1 
22 
26 
23 

« 
29 
21 
27 


46.1 
7.3 . 

46.3 : 

3.;f) '- 
.48 ' 

2. .60 
36.9 ; 
33.8 
12.2 i 

4.8 1 
«.'9 : 

.41 ; 
^.•0 - 
53.-8 

14.?3 : 

73.1 

37.2 : 

2.656 ! 

7.:9 ' 

43.'8 ; 

;9..3 : 
1.4 
30.,3 
26.0 
'6.6 ; 
.40 : 
.2 

"io2!'0""; 

84.2 • 
13.-8 

2.S53 , 

3.2 
31 .?6 - 

1.9 ; 
4.7 , 

33.9 I 


7 

a 

27 
33 
30 
10 
12 
17 
.24 
1« 
34 
23 

4 
15 

3 

9 
28 
20 

:8 
19 
31 

B 
14 
22 
35 
86 

i' 

.2 
16 
29 
26 
IB 
32 
25 
11 


124. 97 

4(363)419.83 

589. 86 

149. 79 

41.64 

71.61 

675.25 

1,812.58. 
723. 33 
216. 54 
524. 07 
13.78 
203.36 

1,143.00 
187.00 

1,119.59 
405. 95 
163.13 
278. 16 
i586. 74 - 
.'358. 68 ; 


27 
15 
11 
26 
32 
31 
10 

B 

.9 
22 
13 
34 
23 

6 
24 

7 
16 
25 
19 
12 
18 


$1.84 

.70 
2.94 

.61 
1.12 

.36 
-6.45 
1.-67 
1.28 

.41 
1.29 

.06 

.32 
2.34 

.28 
9.80 
1.35 
11.24 

.49 
■6.-85 

.22 


15 




22 




10 


4. Connecticut 

5. Delaware 


23 

21 


6. Florida 


27 


7. Idaho 


7 


8. Illinois 5 


J.6 




20 


10. Iowa 


26 




19 




34 


13. Massachusetts 

14. Minnesota 


28 
13 


15. Missouri 


29 




3 


17. Nebraska 


18 




2 


19 New Jersey 


25 


20. New Mexico 

21. New York 


,6 
32 


22 North Carolina 




23. North Dakota 

24. Oklahoma 


1,183. 90 

l,-840. 63 

;3S3. 71 


5 
2 
17 


7.05 
3.34 
2.63 


5 

8 


25. Oregon 


12 


26. Pennsylvania 

27. Rhode Island 

28. South Carolina 

29. South Dakota 

30 Texas 




23.41 

4.68 

1,,238. 76 

3, 069. 22 

245.97 

87.31 

106.75 

:844.04 

86.95 

248. 92 

485. 25 


53 
.35 

4 

1 

-21 

29 

.2-8 

8 

50 

20 

14 


.25 

.01 

8.95 

2.79 

2.23 

1.41 

.22 

3.21 ' 

.27 

.55 

12.68 


ai 

35 

4 

aa 


31. Utah 


14 


32. Vermont 


. 17 


33. Virginia 


:33 


34. Washington 

35. West Virginia 

36. Wisconsin 


i9 

24 
1 







1 states not included in atbcwe taible: jya^ Ark., -Gia., Ky,, ILa., ffle., Mich., Miss,, TS. H„ ©Me, Thod., 
Dist. of Col. 

2 All data taken from U. S. Bu.of Edac,,, JBul. 11, 1920,-Sta*istics.ar Sttfte Soiiooi Systems, 1917-^8, except 
where otherwise indicated. 

3 Alabama possesses lands belonging to l'6th section ;fund and to-sc3iooriindemnity Iscnd fund, birt it is not 
included in this table because, as last as lands ar«:sdld, proceeds are -used for general State purposes and 
the amount credited to the township or districts. 

* Data in parentheses from an intensiye study by .the author, taiken direct from the official reports cS the 
States concerned. 
6 Includes township funds, the aggregate value-olT^'hich exceeds »ia,0j3OyOOO. 
6 Pub. Educ. in N. C. Rep. by State Educ. committee, 1920, p. 129. 
^ Rep. of S. C. Comptroller iGenersfl, 1920, p. -21. 



STATE SOURCES OF SCHOOL BEVE2vrU|l. 



31 



Tables 32 and 33 liav^ attempted to sliow as accurately as possible the present con- 
dition of permanent school funds in the United States. The data in these tables, 
although essential to the present discussion, leave unanswered one of the chief ques- 
tions at issue, namely, to what extent we may hope to derive an appreciable quota of 
tlie greatly increased State school revenue now imperative, fi'om permanent school 
funds. Far more important than the value of the permanent State endowments is 
the per cent of the total school revenue derived h'om them, anf the possibility of so 
increasing the principal of these endowments as to render them increasingly signifi- 
cant forces. Table 34 shows the per cent of the total school revenue derived fi-om 
pennanent school fiinds in 34 States, arranged in alphabetical order. In Table 35 
these same 34 States are airanged in eight groups, in order of the rank of the importance 
of their- permanent school funds. The data in Tables 34 and 35 are taken from the 
Bureau of Education Bulletin, 1920, No. 11, already referred to. Fifteen units are 
excluded frem these two tables as follows: (a) Foiu" States for which no data are 
pr^ented in the Federal bulletin, as follows: New Hampshire, North Carolina, 
Pennsylvania, South Carolina; (6) the following 11 units whose State permanent 
pulslic school funds have been shown to be nonproductive: Alabama, Arkansas, 
District of Columbia, Georgia, Illinois, Kentucky, Maine, Michigan, Mississippi, 
Ohio, Tennessee. 

Table 34. — Per cent, of public school rtvenue derived from public permanent common 

school funds, ^ 19 IS. 



-States. 


Per 
cent. 


States. 


Per 
ceat. 


States. 


Per 
cent. 


'States. 


cent. 




4.2 
1.3 
G.8 
l.a 
4.7 
1.8 
12.8 
3.1 
1.0 




2.6 

2.1 

.2 

.7 

5.7 

.8 

12.7 

3.2 

19. 7 


New Jersey - 

New Mexico 

New York 

Nortla Dakota 

Oklahoma 

Oregon 


1.0 
20.2 
.4 
13.3 
14.3 
5.3 
.6 
16. (> 


Texas 


13 4 


California 

Colorado 


Louisiana 

Maryland 

Massachusetts 

Minnesota 

Missouri 


Utah... „.. 


4.0 
3.5 


Ciormsctiont. . 




1.2 


Delaware 

FJorida 


Washington 

West Virginia 

Wisconsin. 

■Wyommg 

* 


5.9 
1 






Rh<^e Island 

South Dakota 


L5 


Tnriia-na, 


Nebraska 


24 1 













1 As reported, by Federal Bu. of Educ. 

Table 35. — Thirty-four States grouped and ranked according to per cent of totfil annual 
revenue derived from productive pernmntnt school funds, 191S. 



Groups. 



Per cent. 




Eanlc in 


order of — 




Percent 


Total 


»f total 


current 


rei-enuo 
derived 


revenue. 


from per- 
manent 




funds. 


32 


1 


31 


2 


34 


3 


22 


4 


14 





8 


6 


16 


7 


2.5 


8 


18 


9 


17 


10 


12 


11 




12 


20 


13 



I. 25 to 19 percent 

II. 17 to 12 per cent... 

in. 7 to 5 per cent 



24.1 
20.2 
19.7 

16.6 
14.3 
13.4 
13.3 
12. -8 
12. 7 

6.8 
5.9 
5.7 
5.3 



Wyoming 

Now Mexico. . 
Nevada 

South Dakota, 

Oldahoma 

Texas 

North Dakota 

Idaho 

Montana 

Colorado 

Washington... 

Minnesota 

Oregon 



32 STATE POLICIES IN PUBLIC SCHOOL FINANCE, 

Table 35. — Thirty -four States grouped and ranked according to per cent of total annual 
revenue derived from productive permanent school funds, 1918 — Continued. 





Percent. 


States. 


Rank in 


Drder of— 


Groups. 


Total 
current 

school 
revenue. 


Per cent 
of total 
revenue 
derived 

from per- 
manent 
funds. 


IV. 5 to 4 per cent 


4.7 
4.6 
4.2 

3.5 
3.2 
3.1 

2.6 
2.1 

1.8 
1.5 
1.5 
1.3 
1.2 
1.0 
1.0 
1.0 

.8 
. 7 
.6 
.4 
.2 


Delaware 


33 

26 
29 

30 
13 
6 

11 
24 

27 
15 
10 
2 
19 
5 
4 
21 

9 
3 

28 

1 

23 


14 




Utah 


15 




Arizona 


16 


v. 4 to 3 per cent 


Vermont 


17 


Nebraska 


18 




Indiana 


19 


VI. 3 to 2 per cent. . 


Kansas 

Louisiana 


20 




21 


VII. 2 to 1 per cent 


Florida 


22 




Connecticut 

Wisconsin . . 


23.5 
23.5 




California 


25 




Virginia 


26 




Iowa 


28 






28 




West Virginia 


28 


VIII. Less than 1 per cent 


Missouri 

Massachusetts 


30 




31 




Rhode Island 


32 




New York 


33 




Maryland 


34 



Of the 34 States included in Table 35 having genuinely productive State per- 
manent school funds, only 9 derived more than 10 per cent of their total revenue in 
1918 from these funds, and 7 of the 9 derived less than one-fifth from this source. 
The 3 States ranking highest in per cent of revenue derived from permanent school 
funds, Wyoming, New Mexico, and Nevada, are 3 of the 4 States ranking lowest with 
respect to total expenditure for schools. Within the group of 34 States, New York 
ranks highest with respect to total annual revenue, California, second, and Massa- 
chusetts, third. New York and Massachusetts both derived less than 1 per cent of 
their total annual school revenue from permanent school funds, and California only 
1.3 per cent. Moreover, this per cent is too high in the case of California, because 
no less than 18 per cent of her perpetual fund (see Table 32) exists only as a nonproduc- 
tive State debt. 

Such data as have just been presented would seem to justify the conclusion that, 
if the State is to furnish a much larger proportion of the total school revenue in the 
future than it is furnishing at the present time, such increase is not to be derived from 
permanent funds. It may be well to note briefly certain other data and conditions 
which further justify this inference. Table 12 showed that the percentage of total 
receipts derived from all State sources decreased from 23.75 per cent in 1890 to 17.7 
per cent in 1918, and that the percentage of total receipts derived from the income of 
permanent funds and school lands decreased from 5.45 per cent in 1890 to 2.9 per cent 
in 1918. Compaiing these data, we see that, rapid as has been the decline in the 
per cent of revenue derived from all State sources, the decline in the per cent de- 
rived from permanent funds has been even more rapid. For, whereas in the former 
case at the end of the 18-year period under consideration we have a decrease of ap- 
proximately 25 per cent, in the latter case the decrease exceeds 50 per cent. It 
will be well to follow these general statements by data showing the conditions in a 
number of individual States. Table 36 compares for the years 1905 and 1915 the 



STATE SOURCES OF SCHOOL REVENUE. 



33 



actual and prospective value of, and the per cent of school revenue furnished by, per- 
manent funds in two groups of States, A and B. The States included in group A are 
the 6 which in 1905 ranked highest with respect to the per cent of total revenue derived 
from permanent funds. Group B includes 6 States of which intensive studies have 
been made by the author or by a graduate student under his direction. ^ 

Table 36. — Public permanent common school funds, 1905 and 1915. 

[Amounts of funds expressed in thousands of dollars.] 

A. SIX STATES RANKING HIGHEST IN PER CENT OF TOTAL REVENUE DERIVED 
FROM PERMANENT FUNDS IN 1905. 





1905 


1915 


States. 


Principal. 


Total 
intact. 


Esti- 
mated 
prospec- 
tive 
value. 


Approxi- 
mate per 
cent of 
total 
school 
revenue 
from in- 
comes 
and rents. 


Principal. 


Total 
intact. 


Esti- 
mated 
prospec- 
tive 
value. 


Approxi- 
mate per 
cent of 
total 
school 
revenue 
from in- 
comes 
and rents. 


Wynminf 


173 

1,6.51 

52, 660 

291 


173 
1,038 


3,173 

2,811 
65, 660 

2,414 
17, 000 

5,599 


49.3 
49.19 
27.69 
2 21.2 
20.16 
13. 53 


1 1, 109 
1 3, 197 

1 68, 101 
2,637 

3 21,095 
16,395 


1 1, 109 
12,817 
68, 101 
2,637 
3 21, 095 
16,395 




14.3 


Nevada (1906) 

Texas 


3,217 
1 69, 699 

5,278 
3 26, 095 


21.2 
1 13 


Utah (1902) . . . 


291 


4.4 


Oklahoma 


10.5 


Oregon 


4,599 


4,599 


6.1 









B. SIX STATES SELECTED FOR SPECIAL STUDY. 



Alabama 

California (1906). 

Colorado 

Illinois (1906)... 

New Jersey 

Massachusetts... 



2,831 
5,263 
1,408 
7,033 
4,523 
4,880 






9.85 
6.0 
4.97 
3.7 
6 2.05 
L21 


^ 3, 022 

1 7,813 

1 7,276 

1 8, 109 

6,215 

5,000 






3,237 


5,663 
16, 861 
16, 605 


6,187 

'"i'llm 




1 102. 836 
1 20, 847 






4,880 













3.7 
0.78 
I 5.9 
1 2.0 
1.2 
0.77 



1 1916. 



2 1904. 



3 1918. 



* 1914 



There are at least "two reasons besides those already presented why it Avould be 
unwarrantable to hope for the solution of school financial difficulties through the 
building up of vast public endowments sufficient to provide the increasing financial 
needs. First, the natural resources from which such funds might be derived, especi- 
ally public lands, have been largely disposed of or exhausted. Second, in a period 
such as the present, when the schools are threatened with financial shortage, neither 
State legislatures nor the people at large will be willing to devote large additional 
revenues to the principal of permanent funds bearing a small rate of interest. The 
tendencey will be, on the contrary, to devote to the current school fund, rather than 
to sequestered endowments, any large additional quotas of revenues aA^ailable for 
schools. 

If the solution of the difficulties is not to be found in the creation of A'ast State per- 
manent school funds, to what sources must we look? The answer is, either to State 
appropriations or taxation. 

APPROPRIATIONS. 

Of the 16.8 per cent of the total receipts for public schools derived from State 
sources in the year 1918, all except approximately 3 per cent was furnished by State 
taxes and appropriations. It is evident, therefore, that at the present time the 

1 Five of these States have bsen studied by the author. The sixth. New Jersey, was studied by E. W. 
Tiegs, graduate student in education, LTniversity of Minnesota. 



34 STATE POLICIES IN PUBLIC SCHOOL FINANCE. 

combined revenue from these two sources greatly exceeds in relative importance the 
revenues derived from all other State sources. Carrying the analysis further, it is 
seen that, of the 681 millions of dollars constituting the total receipts for public schools 
in 1918 derived from State, county, and local taxation and appropriations, 61 millions, 
or approximately 9 per cent, were derived from State appropriations, and 40 millions, 
or approximately 6 per cent, from State taxation. It is evident that the public 
schools are receiving more revenue from State appropriations than from State school 
taxes. Not only is this true, but the State appropriation is much more widely used 
at the present time than the State school tax, for there are in 1920 at least 19 States 
which levy no State school tax, whereas every State in the Union makes appropria- 
tions for schools. Prior to the passage of the Smith-Hughes Federal Act in 1917, 
there were certain States, such as Colorado, which had never pursued any continuous 
policy of making State appropriations for school support. But the fact that the 
Federal act requii'ed each State, in order to receive the Federal subvention, to match 
the Federal aid dollar for dollar, resulted in universalizing the policy of State school 
appropriations. It must be borne in mind that the Smith-Hughes Act was not in 
any sense the beginning of the policy of making State school appropriations. Without 
attempting to go into the history of this matter, we may note that this method of 
pro\iding school revenues dates back to early colonial days. The purpose at present 
is merely to call attention to the reason why every State now employs the appro- 
priation method, whereas many States still refrain from levying a State school tax. 

Educational appropriations fall into two classes, general and special. General 
appropriations are devoted to a fund distributed for general purposes. Special 
appropriations are made to maintain, foster, or encourage some special activity or 
project, such as vocational education, high-school teacher-training departments, 
or the State department of education. How widely States differ with respect to the 
extent to which they employ appropriations as a means of providing State aid has 
been revealed by tables already presented. Table 24 showed that the only appro- 
priation which Colorado makes is that necessary to receive and to administer the 
Federal grant for vocational education. In striking contrast to this. Table 29 showed 
that Mnnesota makes no less than 12 classes of appropriations; California, 10; Massa- 
chusetts, 8; New York, 7; and Alabama, 5.' The various types of appropriations 
have been shown in Table 22 for New York and in Table 23 for Alabama. 

It should be noticed that the moneys of which State school appropriations are 
constituted are frequently drawn from a State general fund, which in the last analysis 
is largely composed of the proceeds of State taxes. This being true, it is manifestly 
impossible to determine accurately how much of the revenue reported as derived 
from appropriations should, from the stand poin to f origin, be looked upon as proceeds 
of taxation. But however difficult and unsatisfactory it may be to undertake to 
separate appropriations from proceeds of taxation when viewed from the standpoint 
of origin, the fact remains that when \iewed from the standpoint of method or policies 
of finance, these two types of funds represent widely different principles, as will be 
shown in the concluding paragraphs of the present account. Reserving this subject 
for later treatment, we may now turn to the question of State taxation for schools. 

STATE SCHOOL TAXES. 

There are no less than four ways in which a State may levy State taxes for schools: 
First, a general mill tax may be levied on all taxable real and personal property, the 
proceeds of the same to be devoted to some general school fund; second, such a tax 
may be leaded for some special piu-pose, such as physical education, or high-school 
normal -training departments; third, instead of fixing the rate, the laws may provide 
for the levying of a general mill property tax sufficient to raise a fixed sum, leaving 
the rate undetermined; thus, Arizona provides that a State school tax shall be levied 

1 The Alabama new school code of 1919 increased this number to 21. 



STATE SOUECES OF SCHOOL UEVENUBl 



35 



sufficient to raise $750,000; fourth, a State may provide for the levying of special 
taxes with the proviso that all or a portion of the proceeds of the same shall be devoted 
to schools. Such special taxes include income taxes, inheritance taxes, taxes on 
corporations, taxes on stocks and bonds, poll taxes, taxes on various specified occu- 
pations, and taxes on licenses. 

A study recently made dealing with conditions in the years 1919 and 1920 shows 
that 19 of the States levied no State tax of any sort for schools, whereas 29 States did. 
The States included in each of these two groups are shown in Table 37. 

Table 37. — Status of the State school tax, 1919-20. 
29 STATES DEVOTING A STATE TAX TO SCHOOLS, i 



North Atlantic. 


South Atlantic. 


South Central. 


North Central. 


Western. 


1. Maine. 

2. Massachusetts. 

3. New Hampsliire. 

4. New Jersey. 

5. Vermont. 


1. Delaware. 

2. Florida. 

3. Georgia. 

4. North Carohna. 
•5. Virginia. 

6. West Virginia. 


1. Alabama. 

2. Arkansas. 

3. Kentucky. 

4. Louisiana. 

5. Tennessee. 

6. Texas. 


1. Indiana. 

2. Minnesota. 

3. North Dakota. 

4. Ohio. 

5. Wisconsin. 


1. Arizona. 

2. California. 

3. Nevada. 

4. New Mexico. 

5. Utah. 

6. Washington. 

7. Wyoming. 



19 STATES NOT DEVOTING ANY STATE TAX TO SCHOOLS. 



1. Connecticut. 


1. Maryland. 


1. Mississippi. 


1. Illinois. 


1. Colorado. 


2. New York. 


2. South Carolina. 


2. Oklahoma. 


2. Iowa. 


2. Idaho. 


3. Pennsylvania. 






3. Kansas. 


3. Montana. 


4. Rhode Island. 






4. Michigan. 

5. Missouri. 

6. Nebraska. 

7. South Dakota. 


4. Oregon. 



1 The distinction between State and county school taxes made in the first paragraph of our discussion of 
school revenues and national aid (see above page 17) should be recalled at this point. This distinction ex- 
plains why Montana and certain other States are not included in the present table. 

Table 37 does not attempt to show either the type or the rate of the school tax levied 
by the 29 States levying such a tax. However important these two aspects of the 
present subject, we may postpone their consideration for the present. The signifi- 
cance of Table 37 is that it shows which of the States and what proportion of the 
entire gi'oup have adopted State taxation as a policy for raising school revenues. 
It is easy to discover from Table 37 that this policy is employed most by Southern 
States and least by Northern States. In order to show more accurately to just what 
extent this policy varies in different sections, it has seemed well to present the matter 
somewhat more precisely, as is done in Table 38. 

Table 38. — Number and per cent of States in each major division levying or not levying 

a State school tax, 1920. ^ 



Group or di\'ision. 


States levying. 


States not levying. 


Number. 


Per cent. 


Number. 


Per cent. 




29 


60 


19 


40 






North Atlantic Division 


5 
6 
G 

5 

7 


56 
75 
75 
42 
64 


4 
2 
2 
7 
4 


44 




25 


South Central Division 


25 


North Central Division... 


58 




36 







1 District of Columbia not included. 



Table 39 ranks the five major divisions of the States on the liasis of per cent of States 
of each division which levy some type of State school tax. 



36 



STATE POLICIES IN PUBLIC SCHOOL FINANCE. 



Table 39. — Major divisions ranlced on the basis of per cent of Slates therein ivhich levy 

State school taxes. 



Rank. 


Division. 


Per cent. 


1.5 
1..5 
3 

4 
5 


South Central 


75 
75 
64 
56 
42 


South Atlantic 


Western . . 




North Central. 





The ranks of the major divisions in Table 39 correspond closely to the ranks in Table 
13, which showed the per cent of total school revenue derived from State sources in 
1915. This would seem to suggest a direct relationship between the policy of State 
taxation for schools and the general policy of depending upon State versus local 
sources for school revenue. From this general statement of the extent to which the 
State school tax is employed as a revenue producer we may now turn to a more de- 
tailed consideration of the different types of State school taxes and the extent to which 
they are employed. 

STATE SCHOOL MILL TAXES. 

Three types of State school mill taxes are to be found to-day: (1) Mill taxes for 
general school purposes, rate specified; (2) mill taxes for general school purposes 
sufficient to produce a fixed sum, rate not specified; (3) a mill tax for special school 
projects. 

No less than 20 States levy a State mill tax on all taxable real and personal property 
the proceeds from which are to be devoted to general school purposes. The rate of 
such tax varies all the way from seven-tenths of 1 mill in Wisconsin to 4.6 mills in 
Utah, with an approximate median rate of 2 mills. The 20 States which levy a mill 
tax for general school purposes are as follows: 

Table. 40. — States levying general State will tax for schools. 

1. Alabama. 6. Louisiana. 11. New Jersey. 16. Texas. 

2. Arkansas. 7. Maine. 12. New Mexico. 17. Utah. 

3. Florida. 8. Minnesota. 13. North Carolina. 18. Vermont. 

4. Indiana. 9. Nevada. 14. Ohio. 19. Virginia. 

5. Kentucky. 10. New Hampshire. 15. Tennessee. 20. Wisconsin. 

In Table 41 are shown the rates levied by the States included in Table 40, and the 
States levying the same. 

Table 41. — State mill property {ad valorem) public school tax for general school purposes. 

Rate in mills. States. 

4.6 Utah. 

3.5 Texas. 

3. 5 New Hampshire (only on estates iu unorganized parts of the State). 

3.2 North Carolina. 

3. Alabama, Arkansas. 

2.75 New Jersey .1 

2.5 Louisiana. 

2. New Mexico, Tennessee. 

1. 8 Kentucky, Ohio. 

1.5 Maine. 

1. 36 Indiana. 

1.0 Florida, Minnesota, Vermont, Virginia.^ 

0.76 Nevada. 

0. 70 Wisconsin. 

1 It is doubtful whether New Jersey should be included in Table 41; see discussion in text following 
Table 42. 

2 Plus supplementary taxes as foUows: On real estate, 0.8 miU; on tangible personal property, 0.4 miU. 



STATE SOURCES OF SCHOOL EEVENU^. 37 

Some States in addition to a mill tax of specified rate, other States in place of it, 
provide that a State mill property tax shall be levied sufficient to produce a certain 
total sum, or so much per school child. In such cases the rate is left undetermined, 
and varies from year to year with the assessed valuation of the property of the State. 
This mode of taxation is employed by five States. In three of the five, New Hamp- 
shire, New Mexico, and Wisconsin, this tax is additional to a State school mill tax of 
specified rate. In the remaining two, Arizona and Washington, it is the only State 
school tax levied. Table 42 shows the States employing this type of school tax. 

Table 42. — State mill taxation for schools, rate undetermined. 

states. Basis of rate. 

Arizona Sufficient to raise $750,000. 

New Hampshire District tax sufficient to pay to State S2 per cMd in district. 

New Mexico Sufficient to raise $15,000 for vocational education. 

Washington Sufficient when added to the school income fund to produce $10 per child of school 

age. 
Wisconsin Sufficient to pay State aid for graded schools. 

New Jersey is in a class by itself, and, strictly speaking, belongs neither in Table 41 
nor in Table 42. It was included in Table 41 because the law provides that such a 
tax shall be levied on real and personal property as, when added to a State school 
appropriation of $100,000, will produce a sum equal to a State 2.75 mills tax on all 
real and personal property. An analysis of the situation will show that in reaUty 
neither the amount to be raised by taxation nor the rate is determined, because the 
amount is not known until after the legislature makes its appropriation; and the rate 
is not fixed, because it depends upon both the appropriation of the legislature and the 
changes in assessed valuation.- The rate never actually reaches 2.75 mills. 

Widely different in purpose from the tax just described is a State mill property tax 
levied for the benefit of some special type of training or educational institution. This 
latter type of tax is levied by only seven States, the rate, as might be expected, being 
much lower than that of taxes levied for general school purposes. In fact, it varies 
from only five-tenths of a mill to five-hundredths of a mill, with an approximate 
median rate of two-tenths of a mill. It will be discovered that the States which levy 
taxes of this sort are largely the same as those levying State mill taxes for general 
school purposes. In fact, only two of the seven States constituting the former group 
(North Dakota and Wyoming), are not found in the latter also. These seven States, 
together with the rate and purpose of their special taxes, are presented in Table 43. 

Table 43. — State mill property tax for special school projects. 

Mill. States. Projects for which levied. 

0. 5 Tennessee State high-school aid. 

. 2 Arkansas. Vocational education. 

. 2 North Dakota. County agricultural and training schools. 

. 2 Utah. State high-school aid. 

. 125 Wyoming. High-school normal training. 

.05 Indiana. Vocational education. 

. 05 Nevada. Physical trainmg. 

POLL AND MISCELLANEOUS TAXES. 

In a number of States poll taxes for school purposes are collected by minor con- 
stituent units, such as counties or towns. In only nine is a poll tax for schools a State 
tax. North Carolina levies the highest Statef school poll tax, $1.43, and Indiana the 
lowest, 50 cents. Twenty-five per cent of the proceeds of the tax levied by North 
Carolina may be devoted to pauper aid. Were this portion of each poll tax so used, 
the remainder, $1.0725, would still be greater than the State school poll tax levied by 
any other State. The tax rate is $1 per poll in the seven remaining States, namely: 
Arkansas. Georgia. Louisiana, Tennessee, Texas, Virginia, and West Virginia. 



38 STATE POLICIES IN PUBLIC SCHOOL PUSTANCE. 

Two States devote to their schools the proceeds of State taxes which in the present 
account may well be claasiiied as miscellaneous. Georgia thus disposes of the pro- 
ceeds of dog taxes and taxes on shows; and West Vii'ginia of taxes levied on marriage 
licenses, State Licenses, a.nd forfeitures. It is interesting to note that every one of 
the States named in the last two paragraphs, except Indiana, is south of the Mason 
and Dixon line. 

TAXES ON CORPORATIONS, SPECIAL TYPES OF PROPERTY, INCOME, 
INHERITANCE AND OCCUPATIONS. 

Under this general heading are included income taxes, inheritance taxes, occupa- 
tion taxes, taxes on special classes of corporations, such as banks and railroads, various 
kinds of taxes on all corporations of a given State (California), and taxes on intangible 
property, such as stocks and bonds. The tendency of oiu" national industrial life 
away from what were once almost exclusively agricultural occupations to an in- 
creasingly larger proportion of manufacturing and commercial acti^dties has brought 
about a transformation in the character and in the form of property and wealth. 
Formerly wealth was represented almost entirely by real and personal property; 
to-day wealth and property are largely corporate, and many forms of income derived 
from sources other than tangible property can be reached only by a special form of 
taxation. Possession of real or personal property is in many cases not the truest 
index of ability or obligation to support governmental undertakings. Frequently 
a much truer index of ability and obligation is the possession of income, whether 
received as a salary or derived from intangible property, such as stocks and bonds. 

To-day on every hand comes the demand for vastly increased pubtie revenues not 
only for schools but for roads, public health, workers' pensions, and a multitude of 
other public projects. This demand is everywhere met with loud protest against 
any addition to the burden of taxation levied on land. This situation, together with 
the change in wealth from land to corpMjrate and intangible property, has given rise 
to the demand that new sources of public revenue be taxed. Such is the situation in 
which the schools find themseh'es, and the necessity of discovering new sources of 
revenue lends a peculiar interest to what any of the States may be doing aheady in 
the direction of taxing occupations, privileges, incomes, etc., which heretofore have 
furnished little or no school revenue. According to the most recent statement of 
the Federal Department of Commerce, taxes are leaded on corporation stock by 33 
States, on sa^dngs banks by 9 States, and on inheritances by 42 States. It must be 
borne in mind that the taxes here referred to are State taxes. The number of States 
would be increased were States included in which taxes of these types are levied 
by counties. Taxes of the classes just referred to are le\ded as State school taxes in 
the following 10 States only: California, Delaware, Louisiana, Maine, Massachusetts, 
New Hampshhe, New Jersey, Utah, Texas, and Virginia. Undoubtedly, in some 
other States State revenue from taxes of the types now under consideration, although 
not devoted by law to the schools, ultimately reach them. This occurs where the 
proceeds are paid into some general State fund from which school appropriations as 
well as appropriations for other State projects are made. In California a portion of 
the proceeds of corporation taxes are devoted directly to the State high-school fund. 
The remainder of the proceeds is paid into the State general fund, of which in 1918 
72 per cent was derived from the proceeds of coriroration taxes. Out of this general 
fund is paid State aid to elenientary schools and to certain other educational projects. 
Consequently, a large portion of the proceeds of corporation taxes reaches the schools 
by an indhect method. Table 44 shows the taxes on corporations, incomes, inherit- 
ances, and occupations levied for school purposes in the 10 States aheady named. 



STATE SOURCES OF SCHOOL EEVENUE^. 39 

Table 44. — State school corporation, incoriu, inheritance^ and occupation tazes.^ 



Type of tax. 


State. 


Character of tax. 


I 


Corporation: 

Bank 


New Hampshire 


A bank tax on nonresidents at local rate; rates vary- 
widely. 

Proceeds of one-half of taxes on savings bank franchises; 
one-half proceeds of taxes on deposits of trust and 
bonding companies. 

1.8 mills. 




Do 




Francliises 

Railroad 

All corpora- 
tions. 
Income. . 


Kentucky 






Tax on first-class railroad property at average of local 
rates. 

One mill tax (10 cents on every $100) on assessed valua- 
tion of intangible property and on rolling stock. 

Rates and bases vary .2 








California 


TT 


Massachusetts. 

Delaware. 

California 


nr 


Inheritanc-e 3 

Occupation 


Graduated scale dependent upon the value of the inher- 
itance and degree of relationship of heirs. 

One-fourth of proceeds of tax. 


TV 


Virginia. 
Louisiana. 
Delaware. 
Kentucky. 
Texas...". 




Utah 


(a) SI on mining licenses, plus 2 2 per cent of total pro- 
ceeds of mdning; seven-sixteenths of total proceeds of 
(a) and (6) go to the State school fund. 







1 Compiled from data in an unpublished study on State School Taxation, by E. C. Culbert, graduate 
student in education, University of Minnesota. 

2 See Table 47. 

3 Certain other States devote proceeds of inheritance taxes to permanent funds; such States are not named 
here, as this portion of the present account is concerned only with taxes levied for current revenue. 

CORPORATCON TAXES. 

Table 44 shows that six States— New Hampahire, Maine, New Jersey, Kentucky, 
Virginia, and California — ^levy State school taxes on corporations. In each of the 
first three of these States very limited use is made of the corporation tax for school 
purposes. California, on the other hand, has developed this type of taxation exten- 
sively. Earlier paragraphs have related how this State abolished her State property 
tax for school purposes, and substituted therefor a State corporation tax. It was nat- 
ural that such a policy should result in levying such a tax upon all classes of corpora- 
tions. Table 45 shows that as a matter of fact California does include all corporations 
in this system of taxation. It will be seen that five classes are taxed on their gross 
receipts, one class (banks) on shares of capital stock, one (insurance companies) on 
gross premiums, and all other corporations on their franchises. The rates of taxation 
vary from 0.009 per cent to 5.25 per cent. 

Table 45. — California corporation taxes.^ 
[Largely devoted to public schools.] 



Corporations taxed. 



Tax levied upon — 



Rate per 
cent. 



1. All railroad companies, including street railways 

2. All car companies: Sleeping, palace, refrigerator, etc . 

3. Express companies 

4. Telegraph and telephone companies 

5. Gas and electricity companies 

6. Insurance companies 

7. Banks, National and State 

8. All companies not included in above seven classes . . . 



Gross receipts 

do 

do 

do 

do 

Gross premiums 

Shares of capital stock- 
Franchises 



5.25 
3.95 
.009 
4.2 
5.6 
2.0 
1.16 
1.2 



1 Based on California revenue law, 1918, pp. 40-44, sees. 3664-65. 

At the time California entered upon her policy of making corporations rather than 
real and personal property the source of State taxation, she recognized clearly she 



40 



STATE POLICIES IST PUBLIC SCHOOL PINAIsrCE. 



was embarking upon an experiment (cf. State Controller's Rep., 1909-10, p. 28). How 
rapidly the new policy developed is shown by Tables 46 and 47, Table 46 shows the 
gTowth in the number of corporations assessed, and in the proceeds. Table 47 shows 
the rate of tax levied on the fii'st five classes of corporations named in Table 45 froin 
1912 to 1918. In every case except that of express companies the rate in 1918 is greater 
than in 1912. 

Table 46. — California corporation taxes, 1912-1918.^ 



Years. 



1911-12 
1912-13 
1913-14 
1914-15 
1915-16 



Number of 
corpora- 
tions 
assessed. 



19, 721 

19, 693 

20, 478 

20, 979 

21, 994 



Proceeds, 
in millions 
of dollars. 



10.38 
10. 88 
12.96 
13.51 
14.99 



Years. 



1916-17. 
1917-18. 



Totals 



Number of 
corpora- 
tions 
assessed. 



19, 623 

18, 223 



Proceeds, 
in millions 
of dollars. 



15.64 
16.37 



94.73 



1 All data from California State controller's Rep., 1916-1918, pp. 39-40. 

2 Comprted. 

Table 47. — California corporation tax rates, 1912-1918} 



Companies. 


Rate per cent. 


Increase, 1918 over 
1912.2 


1912 


1914 


1916 


1918 


Amount. 


Per cent. 




4.00 
3.00 
2.00 
3. .50 
4.00 


4. 75 
4.00 
2.00 
4.20 
4.60 


5.25 
3.95 
1.60 
4.50 
5.25 


5.25 
3.95 
.90 
4.20 
5.60 


1.25 
.95 

3-1.10 

.70 
1.60 


0. 3025 


Ca,r 


.3166 




3-. 55 




.20 




.40 






1 All data from Calif. State Controller's E 

2 Computed. 

3 Decrease. 

I] 


ep., 1916-1 
STCOME 


918, p. 39. 

TAXES 











A State income tax has long been advocated by many seeking to discover new 
sources of revenue for school purposes, and more recently municipal income taxes 
have been strongly urged as a panacea for present and future ills. The movement 
toward State income taxes, which appeared to be getting well under way, was given a 
distinct setback by the Federal income tax. Except for this setback, it is possible 
that many of the States would be levying a State income tax for school purposes. As 
it is, only 2 States, Delaware and Massachusetts, derive school revenues from this 

source. 

Delaware devotes $250,000 annually from income tax proceeds to the public schools, 
the balance of the proceeds being devoted to the State highway department. (Laws, 
1917, p. 16, ch. 8, sec. 1; School Code, 1919, p. 32, sec. 212.) 

Massachusetts, by an act approved July 24, 1919 (General Acts, 1919 ch. 368), 
provided for an annual current "general school fund" to be derived from the proceeds 
of a State income tax. The fund provided for by this act is not a definite amount, 
but is to be a sum sufiicient to finance the projects described in Part I of the act, and 
to be available for maintaining these projects without further legislation. Table 48 
shows the classes of incomes recognized by law, and the rates provided for each. 



STATE SOURCES OF SCHOOL EEVEjSTUiJ. 41 

Table 48. — Massachusetts State income tax. 



Class. 



Annuities 

Professional earnings exceeding $2,000 per year. 

Gains in dealings 

Interest from money, notes, dividends , 



Rate per 
cent. 



1.5 
1..5 
3.0 
G.O 



It was estmiated that tliis act would result in making available for the schools an 
annual current fund of approximately $4,000,000, a little less than one-sixth of the then 
total annual school expenditure, and more than 19 times the income of the State 
permanent school fund. The amount actually derived from the income tax in the year 
1919-20 amounted to $3,062,643. (Mass. Dept. of Educ. Bui. 1920, No. 11, p. clxxxix, 
column 55. )i 

Occupational taxes for school purposes are levied by only 2 States, Texas and Utah. 
Although termed occupational taxes in both States, in Texas they appear to be what 
are ordinarily termed licenses. The list of occupations taxed by Texas is a long one, 
and the rates vary from |1 to $300. ^ One-fourth of the entire proceeds are devoted to 
school support. 

Utah levies school occupation taxes on one pursuit only, namely, mining. On this 
industry two taxes are levied: First, a license tax of $1 on every "person (excepting 
em^ployees), corporation, or association" engaged in mining; second, a tax of 2 per 
cent on the total net proceeds. 

Seven-sixteenths of all moneys derived from these two types of taxes are added to 
the State school fund.^ 

INHERITANCE TAXES. 

At least 5 States, California, Delaware, Kentucky, Louisiana, and Virginia, devote 
to schools the moneys derived from taxes on inheritances. In 1918 California realized 
from State inheritance taxes, after paying costs of collection, a net sum of approxi- 
mately $2,725,000. The law provides that the first $250,000 of the annual proceeds 
of the State inheritance tax shall be devoted to the State current school fund for ele- 
mentary schools. Any excess over this amount is credited to the State general fund. 
This fund is used largely as a source of school appropriations, consequently a consid- 
erable part of the proceeds of inheritance taxes, in addition to those composing the 
specified $250,000, ultimately reaches the schools indirectly. 

Delaware provides that the proceeds of the State inheritance tax up to $100,000 shall 
be devoted to schools. Any excess over this amount is credited to the State sinking 
fund. Virginia devotes one-half of the proceeds of the State inheritance tax to the 
public school fund apportioned by the State on the basis of school population. The 
remaining half is returned to the county or district from which collected for the use 
of prim.ary and grammar grade schools. Louisiana, in contrast to Calif ormia, Dela- 
ware, and Virginia, provides that the entire proceeds of State inheritance taxes shall 
be used solely for the support of public schools. 

Owing to differences in interpretation of the law, the public schools of Kentucky 
have only recently received the moneys from the State inheritance taxes to which the 

1 For a more complete account of this fund, and ofthemethodsof distributing it, .see Swift, F. H., Studies 
in Public School Finance (ready for press). 

2 Sayles, Texas Civil Statutes, 1897; Supplement to the Statutes, 1906, p. 500, article 5049. 

3 Utah Compiled Laws, 1917, sees. 59-62; Session Laws, 1917, ch. 97, sees. 1, 2, IS. 



42 



STATE POLICIES IN PUBLIC SCHOOL FINANCE. 



State educational authorities claim the schools are entitled. Supt. V. O. Gilbert, in 
his biennial report, 1918-19, p. xvii, presents the situation thus: 

In March, 1918, the State auditor refused to continue to credit the State school fund 
with its regular proportion of the inheritance tax. On November 22, 1919, the court 
of appeals decided that the State school fund was entitled to eigh teen-fortieths of all 
money received by the State from inheritance taxes. On account of this decision 
there 'has already been transferred to the State school fund more than $500,000. This 
money can not be distributed during the current school year. There will be a consid- 
erable balance at the beginning of the school year 1920-21, however, which will permit 
the declaration of the la'rgest per capita in the history of the State next July. 

Before leaving this topic something should be said concerning the variation in ratea 
and in classification of inheritances among the States under consideration. We may 
confine ourselves to Louisiana and Virginia. In Louisiana all estates valued at less 
than 110,000 are exempt. If the beneficiary of an estate valued at $10,000 or more is 
husband or wife or a direct asscendant or descendant, the rate is 2 per cent; if a col- 
lateral relative or a stranger, the rate is 5 per cent. 

Virginia classifies beneficiaries as follows: Class A, husband, wife, lineal ancestor 
or lineal descendant; class B, brother, sister, nephew, or niece; class C, all others. 
The rate of tax varies both as to classification of heirs and as to value of the estate. 
This is shown in the following table: 

Table 49. — Virginia system of inheritance taxation. 



Beneficiaries. 


Exempt 
valua- 
tion. 


Upper 
limit of 
exemp- 
tion to 
$50,000. 


$50,000 

to 
$100,000. 


$100,000 

to 
$500,000. 


$500,000 

to 

$1,000,000. 


More than 
$1,000,000. 


Class A 


$10,000 
4,000 
1,000 


Per cent. 
1 
2 
5 


Per cent. 
2 
4 

7 


Per cent. 
3 
6 
9 


Per cent. 
4 
8 
12 


Per cent. 
5 


Class B 


10 


Class C. 


15 







We have now described and to a limited extent discussed the various types of State 
school taxes which are levied to-day by the 29 States levying such taxes. Table 50 
forms a fitting conclusion to this section of the account. 



STATE SOURCES OF SCHOOL EEVENUB* 



43 



















pro- 
and 
de- 




pay 
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local 

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State 


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03 
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Sufficient to raise $750,000. 

$250,000 from collateral inb 
per high-school pupil in av 
ance, paid from corporatio 

Income tax, entire proceed; 
inheritance tax proceeds i 

Dog tax and show tax go to 

Corporation franchise tax, 1 
ceeds of inheritance taxes. 

Inheritance tax and license t 
salt. 

One-half of taxes on bank 
posits. 

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into State treasury 
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44 



STATE POLICIES IN PUBLIC SCHOOL TINANCE. 



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THE EEMEDY. \ 45 

V. THE REMEDY. 

It will be well to review briefly at this point the more important positions thus far 
maintained, and out of which the conclusions have grown. It has been shown: 

(1) That the increasing numbers demanding education, and the increasing demands 
put upon the schools have led to enormous increases in expenditures. 

(2) That there is every reason for believing that these expenditures will continue 
to increase, rather than to decrease. 

(3) That the States have, by reforms in educational organization and legislaftion, 
insisted more and more upon the recognition of the principle that schools are State, 
not local, institutions. 

(4) That in direct Adolation of this principle they have shelved more and more the 
burden of school support, and placed a steadily increasing proportion of the same 
upon local school units. 

(5) That as a result of this policy the schools have continued to be fundamentally 
and in fact local, not State, institutions. 

(6) That educational opportunities in the United States are not, and never have 
been, universal, democratic, free. 

(7) That inequalities, flagrant and perhaps ominous for the future of the Nation, 
exist in every State. 

(8) That as long as the schools continue to be financially dependent upon local 
revenues, so long will these inequalities continue. 

(9) That to eliminate these inequalities vastly increased revenues must be pro- 
vided. 

(10) That this increase in revenue should be provided not by school districts or other 
local units, but by superior units: first, because the local units are already over- 
burdened; second, because only such a policy on the part of the State or Nation is 
capable of evening out the inequalities of school support now existing. 

Such in the main are the positions thus far maintained. Let us now turn to a 
furthe'r consideration of the very practical question — the remedy. 

From the standpoint of school finance the remedy is twofold: First, vastly in- 
creased school revenue must be provided; second, antiquated, unscientific, and 
unjust methods of apportioning State aid must be supplanted by methods and systems 
of support based upon sound political, economic, and educational principles. Al- 
though recognizing that the second phase of the financial reform is from many stand- 
points as important as the fu'st, it is necessary to confine the present consideration 
to the necessity of increased revenues. 

It is not enough to say that the schools need vastly increased revenues. We must 
ask very definitely how much money is needed to make educational opportunities 
universal, free, and equal. The answer to this question is, ' 'No one knows." Nor do 
the present State systems include the machinery necessary for ascertaining this 
knowledge. 

A sound and effective system would provide some means by which to determine 
in advance how much money will be needed to guarantee, first, that every child of 
school age shall be in school; and, second, that the quality of instruction and the 
character of school facilities provided for every pupil shall be worthy and adequate. 

Instead of pm'suing any such policy as this, the States, and the school units witliin 
them, set aside a fairly numerous array of sources of school revenue. This done, 
they collect each year, more or less completely, the revenues these sources furnish. 
Then, to superintendents and principals, they say in substance, ' 'Tliis year you 
have so many dollars. "With this sum you must maintain your schools." The results 
of tliis unscientific method ai'e evident in the variations and inequalities which 



46 STATE POLICIES IN PUBLIC SCHOOL FINAjSTCE. 

"we have seen exist everywhere throughout the United States to-day. Such being 
the conditions and present results, wherein lies the solution? 

The steps to be followed in establishing a system of common-school finance are the 
same as those to be followed in financing any other enterprise. The first question 
to be determined is what projects it is desiral^le shall be maintained. In the present 
case tliis would mean, what number and t^T^es of schools, classes, school officers, and 
educational facilities is it desirable shall be provided at public expen.se? Having 
decided this question on the basis of what is desirable, the next question is, what 
will be the cost? The answer to this question must be worked out by educational and 
financial experts, who in determining it will have due regard to variations in costs 
arising from variations in the conditions existing in different sections. 

After the experts have informed us of the amount of money required for financing 
all desirable projects, we shall yet be obliged to answer the question, can we afford 
to finance them all? In order to answer this question, it will be necessary to determine 
from what sources, Federal, State, county, township, and district, school revenues 
shall be derived, and then how much money for schools these combined sources will 
yield. Although the solution of each of these problems is too difficult and too com- 
plicated to attempt even to outline here, certain general principles may be noted. 

The school budget of the State should be dealt with no longer as a separate and 
distinct thing. New and unprecedented demands for larger public revenues are being 
made by Nation, State, and local community; more money for roads, more money for 
Army and Navy, more money for agricultui-e. more money for public improvements, 
and more money for schools. Either the public purse is that of a Fortunatus, or else 
there are limits beyond which we can not tax property and incomes without under- 
mining the foundations of our prosperity. 

It is a well-known fact that at the present time no reliable statement of the financial 
ability of our States could be given. It is equally well known that before any exact 
statement could be formulated, it will be necessary to change radically existing 
methods of evaluating and taxing property. The unsatisfactoriness, injustice, not 
to say frequent dishonesty, attending existing systems of taxation, and the need of 
reform are matters of common knowledge on the part of all who have undertaken any 
study of public finance. 

The total revenue which can be raised from all sources for all public enterprises hav- 
ing been determined, it will then be necessary for some supreme State authority to 
decide what quota of the total shall be allotted to schools and what quotas to other 
public undertakings. 

We may now consider that we have before us two sums x and y\ x represents the total 
cost of maintaining all types of schools, classes, studies, educational officers, educa- 
tional machinery, and facilities deemed desirable; y represents the total amount of 
revenue available for education. If y equals or exceeds .r, then we may proceed at 
once with the disbm'sement of y, but if not, then we must frankly eliminate from our 
list of educational projects whose cost composes x a siifficient niuaber of projects to 
make x equal y. 

It is the writer's belief, as it is that of large numbers of people, that there is not a 
State in the Union too poor to provide a complete system of free education from kinder- 
garten to university, but this belief must remain an assimiption until facts have been 
presented which warrant it. 

But unquestionably the time has come when every State should consider whether 
it has not abundant wealth to care for all desirable educational projects, and if not, 
whether the State shall not yield the support of some of the educational projects 
now maintained, until adequate educational facilities are provided for every child 
of elementary school age. 



THE KEMEDY. \ 47 

Moreover, despite tlie fact that the elementary school has from the beginning 
remained the pauper child of our systems, one State after another has seen fit to tap, 
for the benefit of the high school, revenues derived from funds, the original intent of 
which was undoubtedly to provide elementary education. 

Any attempt to determine either the limit of public revenue which may be derived 
from all sources, or the proportion of the same which should be furnished by Nation, 
State, and local units, must be preceded by a definite classification of the sources 
from which such revenue is to be drawn. 

This classification will be based on the classification of the unit or units to which such 
sources are to be assigned as revenue-producing sources. Shall the State and district 
and all intervening units be allowed to derive the major portion of their school rev- 
enue from taxes levied on real and personal property? Shall the State and possibly 
its component political corporations, counties, towns, districts, and municipalities, 
each in tiu-n, proceed to impose income taxes after the Federal Government has levied 
a tax on the same incomes? Either there must be a di-vision of sources of revenue or 
a definite agreement between the taxing units as to the total rate and a pro rata division 
of rate and proceeds upon the basis of the share of the burden each is to bear. 

It may be urged that such a program, though sound in principle, will prove exceed- 
ingly difficult, if not impossible, to effect, in view of the number and variability of 
the units, factors, and conditions involved. But we are concerned here primarily 
with presenting a program based upon sound principles, belie\-ing that the public 
of America is rapidly awakening to the fact that the time for temporary expedients 
is past and can be trusted to discover ways and means whereby to put into operation 
any program essentially sound. 

The acceptance of any such program brings before us another fundamental prob- 
lem, namely, what proportion of the cost of any public enterprise should be borne 
by the Nation, by the State, and by the loyal community respectively? The 
answer to this question will be determined by the answer to two other questions, 
namely, first, to what extent is the enterprise under consideration a National, a State, 
or a local enterprise; second, to what extent do the inequalities in financial ability, 
in understanding of and in zeal for the enterprise, require that it be supported and 
controlled by superior political units. 

In the case of the public schools, although a complete solution remains to be worked 
out, the answer may now be stated in general terms. That education is a National 
and not merely a State concern, no one who realizes the significance of education 
and who is familiar with present conditions would deny. But, however true this 
may be, the fact remains that by the Federal Constitution education is one of the 
functions reserved to the States. It follows, therefore, that the public schools are 
distinctly State, not National nor local institutions. In the light of these facts, we 
ra^y say that the State should assmne whatever degree of control and support is nec- 
essary to equalize, as far as possible, educational opportunity. 

At the present time, 77 per cent of the total revenue for schools in the United States 
is derived from local sources. In Massachusetts over 96 per cent is thus furnished. 
A system which entirely ignores local support and control would suffer from lack of 
local interest, direction, and guidance. 

It is undoubtedly true that neither the support nor the control of the pubUc schools 
should be taken over entirely by the State. It is equally true that equality of educa- 
tional opportunity will never be secured until the State provides, supports, and 
controls those factors upon wliich equality primarily depends, and which, therefore, 
may be termed the minimum essentials of educational equality. 

It is well known that teachers' wages constitute the largest single item of school 
expenditure in every community, and also that as is the teacher, so is the school. 
Place upon the State the entire burden of providing teachers' salaries, and the respon- 



48 STATE POLICIES IN PUBLIC SCHOOL FINANCE. 

sibility of determining what such salaries shall be, and existing condkions "will be 
immediately reversed. Each community will endeavor to secure the best trained 
and most capable teacher available, and will be eager to employ teachers eligible 
by experience and training to the highest wage that the State allows. Evidence of 
the truth of this statement could be furnished from States in which the salaries of 
teachers of agriculture and of other special subjects are furnished by the State. 

Undoubtedly the factors which, next to the number and quality of teachers em- 
ployed, determine to the largest degree the equality or inequality of educational 
opportunity are the adequacy of supervision, of general administrative control, and 
of the apparatus directly related to instruction, including such materials as textbooks 
and laboratory apparatus. Let the State provide, support, control, direct, and equal- 
ize these factors, and the present chaos of educational inequalities will become immeas- 
urably diminished. 

Almost as universal as the lack of local enthusiasm for increasing teachers' wages 
is the much greater ease with which communities can be enthused over the project 
of erecting and maintaining a school building of high standards. Let the State estab- 
lish a scale of minimum standards which local communities must meet in the fields 
of educational enterprise delegated by the state of the local units. Then place upon 
local units the responsibility of meeting these standards. The more important items 
of expenditure which would be left, by the system we have proposed, to the local 
communities would be the providing, furnishing, repairing, operating, and main- 
taining of school buildings. The local community would consequently be respon- 
sible also for the cost of fuel, water, light, power, repairs, insurance, playgrounds, and 
play apparatus. 

Such a division of school burdens and responsibility between the State and the local 
communities having been agreed upon as just and necessary, we may now inquire 
what per cent of the total cost of public education will such a pohcy as we have pro- 
posed place upon the State, and what per cent upon the local community. 

Those who have undertaken to answer this question thus far have failed for the most 
part to present any principle upon which an answer might be based. In a number 
of bulletins and monographs, it has been suggested that the State furnish approximately 
one-third of the total revenues required for public schools. 

It would be just as sound a priori to suggest one-half or one-tenth . It is unnecessary, 
however, to be satisfied mth an a priori or arbitrary answer to this question, for we can 
arrive at a scientific answer by determining what per cent of the total cost of public 
education those items of public expenditure which ought to be borne by the State 
constitute, and what per cent those items which ought to be borne by the local unit 
constitute. 

Taking Illinois as an example, we find that in the year 1915-16 the total expenditure 
for common schools was something over 42.5 millions of dollars. Of this total, approx- 
imately 62.35 per cent was expended on general control, instruction, and certain 
auxiliary agencies related to instruction, such as pupils' attendance and equipment 
for instructional purposes; 37. 65 of the total expenditure was for objects we have 
reserved for local support. 

This division of costs is approximately the same as that for the entire United States. 
In the year 1916, of the total moneys devoted to public schools in the United States, 
61.39 per cent was expended upon teachers' salaries, textbooks, and other expenses 
of instruction and general control; 38.61 per cent upon new sites, new buildings, 
equipping, maintaining, and operating school plants, and certain miscellaneous items 
of the same general classes of expenditures. 

It is inevitable that the percentage of the total school revenue devoted to the 
purposes of instruction and the percentage devoted to buildings and maintenance will 
vary with the State, and with the varying educational conditions and needs of the in- 



THE EEMEDY. ^ 49 

dividual States. Upou the basis of the present conditions, it seems safe to say that 
the proportion of the cost which should be borne by the State would range between 65 
and 75 per cent. 

But were every school in the United States provided with a properly trained and 
properly paid teacher, adequate supervision, apparatus, and other State-provided 
facilities, the percentage of total expenditure to be borne by the State would be much 
la»rger. Exactly what per cent it would be under these circumstances can not be 
even roughly estimated. It is possible it might constitute 80, or even more than 80, 
per cent of the total expenditiu"e for public schools. 

It will be urged by some that to place 75 per cent of the responsibility for the sup- 
port of our pubhc schools upon the State would be little less than revolutionary. To 
this we reply that only the most radical reform can overcome the flagrant inadequacies 
and inequahties existing in the school situation in practically every State in the 
Union; and that, further, as long as the schools continue to be to all practical intents 
and purposes local institutions, notwithstanding laws, decisions of the Supreme 
Coui't, and pronouncement of educational theorists to the contrary, so long will edu- 
cational opportunities remain tragically undemocratic and unequal. 

The growing tendency on the part of the National Government to recognize educa- 
tion as a National concern and to provide Federal subventions for pubHc schools has 
been noted, particularly in the account of the Smith-Hughes Act. It may well be 
that a considerable share of the proportion of the school biu'den here advocated to be 
removed from the local units ought to be, and in time will be, assumed by the Nation. 
But these matters lie outside the scope of an account which has chosen to concern 
itself with the subject of State poUcies of pubUc school finance. With this brief 
explanation as to why no further consideration of Federal aid is given at this point, 
we may turn to a final discussion of the question of State sources of school revenues. 

LIMITED POSSIBILITIES OF PERMANENT SCHOOL FUNDS. 

Previous paragraphs have made clear that permanent school funds must be recog- 
nized as negligible factors so far as furnishing any significant quota of school revenues. 
Such a statement does not overlook the fact that public permanent school funds were 
the first stable source of support of free schools in the United States. Indeed, in 
many a State to-day the permanent school fund continues to supply the revenue 
which pays for a large share of State supervision, and insures communication between 
every school unit, however remote, and the supreme State educational authorities. 
It may well be added that a large public endowment for schools gives stability and 
morale to the entire system of State finance, serves as a monument to the belief of 
generations gone in public education, and fulfills many other important functions. 
Undoubtedly means should be provided which mil insure to the State school 
endowments a steady and wholesome growth; for such funds have been proven by 
experience to be essential to a sound and effective system of school finance. Neverthe- 
less, for reasons indicated in paragraphs describing the present condition of these 
funds, it would be folly to attempt to provide revenues sufficiently large to make 
these funds contributory of a major portion of current school revenues. In a word, 
large increments of State school revenue must come either from taxation or from 
appropriations, sources the consideration of which will conclude the present study. 

APPROPRIATIONS VERSUS TAXATION. 

Judging from the diversity of current practices, it would seem there is great need of 
a clear statement of the results and of the principles involved in supporting schools 
by State taxation versus State appropriations. Illinois, by an act of her legislatux-e, 



50 STATE POLICIES IN PUBLIC SCHOOL EINAFCE. 

aad upon the recommendation of the State superintendent of public instruction, 
long ago repudiated in practice the State 2-mill school tax provided for in her consti- 
tution, and substituted therefor legislative appropriations. California abolished her 
State school property tax, and draws increasing amounts from State appropriations. 
A bill fathered by the State Department of Education of Minnesota and presented 
to the legislature of 1921 provided for the substitution of a 2-mill tax for existing 
appropriations. Of especial significance is the fact that in the printed report advo- 
cating this measure, it was urged primarily on the grounds of the change in policy it 
represented. The report stated frankly and with much emphasis that the 2-mill tax 
would jdeld no more revenue than was being derived from appropriations. Despite 
the fact that all the States employ appropriations as a method of providing school 
revenues, whereas only 29 levy a State school tax of any sort, from the standpoint 
both of principle and of practical advantages the balance would seem to be clearly 
in favor of taxation. Let us consider briefly the facta which seem to justify this 
conclusion. 

Appropriations leave it to each succeeding legislature to determine what educa- 
tional projects shall be financed by the State and how generous sjiall be the support 
given them. This results in putting into the hands of laymen not merely the power 
of promoting or blocking educational policies, but of determining new lines of educa- 
tional development. Again, as a result of appropriations, the interests of the schools 
frequently fall victims to political jobbery and logrolling. Furthermore, appropria- 
tions, instead of enabling the State school authorities to foster and elevate the system 
as a whole, frequently compel them to expend a large proportion of the State revenue 
on special projects. Such special projects frequently are determined not by the 
needs of the children in the schools, but by the special interests of the dominant 
political groups. For example, in a State which is largely agricultural, extravagant 
appropriations for the support of agricultural education have been secured, whereas 
requests for appropriations for physical education were refused. The folly of such 
procediu-e is little short of tragic in the face of the well-known fact that country 
children are less healthy and physically less developed than city children. 

A State tax in contrast with State appropriations provides a stable revenue, and 
one which can be estimated in advance. Because of this fact. State authorities may 
map out definite policies in advance, and can determine in advance to what extent 
these policies may be put into effect. A fuither, and from some standpoints the 
most important, advantage of the State school tax is that as the population, wealth, 
and costs of education of a State increase, the revenue derived from State school tax 
automatically increases. The proceeds of a State school tax are, moreover, generally 
credited to some general school fund, which may be used for all lawful objects of 
school expenditure. Such a fund is much broader in its influence than funds devoted 
to a single project. 

A very serious objection to a State school tax of fixed rate is that there is no 
guaranty that it will furnish the amount of money necessary. This difficulty may, 
however, be avoided; instead of fixing a definite rate, the laws may provide for the 
levying of a State mill property tax sufficient to enable the State to fulfill its obli- 
gations to the schools. This method, as already shown, is employed by New 
Hampshire, Washington, and Wisconsin. (See Table 42.) 

It would seem unnecessary to present further arguments in behalf of State taxation 
as the most equitable and satisfactory means for providing large school revenues. 
It is possible that the development of a scientific system of public taxation will rele- 
gate to a minor place taxation on real and personal property and substitute for such 
taxes, taxes on income, profits, sales, occupations, and luxuries. Nevertheless, such a 
change in policy is not likely to take place in the immediate future. Meanwhile the ma- 
jority of the States will continue to levy their State taxes on real and personal property. 



THE REMEDY. \ 51 

Recalling that we have luged that the State provide approximately 75 per cent of 
school costs, let us now try to discover how heavy a burden such a policy, if put into 
effect, would place upon the States; or, in other words, what rate of State tax would 
be required. We shall attempt to answer this question for the year 1920. In so 
doing, we will employ Burgess's method of estimating school costs in 1920, namely, 
that the same amount and quality of public education in 1920 as was maintained in 
the United States in 1915 will require an increase of 100 per cent. Seventy-five per 
cent of this latter simi we may consider the amoimt which should be furnished by 
the States. The rate of State school tax required to raise this amount must next be 
determined. In computing tliis rate, the following formula may be employed: 

Let r=rate to be determined. 

e=total costs for public schools in 1915, 
and ge=estimated costs for 1920. 

75 per cent of ^<?=amount of support to be furnished by the State, 
r=valuation (estimated, true, or assessed). 

75 

™ -11 1 -^100 1.5? 

Then r will equal = 

^ r V 

In determining State tax rates, the question at once arises what valuation shall be 
employed. This will depend upon the purpose. If it be to show what the rate would 
be on present valuations, we must use assessed valuation of property subject to State 
taxation. The advantage of this basis is that it enables one to compare the proposed 
tax rate to be levied by the State with the rates at present levied by the States or by 
local communities. There are, however, serious objections to this basis. A valua- 
tion which includes only property subject to State taxation excludes in some States 
much property subject only to county or district taxation. Again, there is no uni- 
formity among the States as to the per cent of true valuation employed as the basis 
of assessed valuation. Some States provide that assessed valuation shall represent 
100 per cent of true valuation; other States assess certain classes of property at 60 
per cent or less of true value. From this it follows that, if the pm-pose is to compare 
the burden that would be imposed upon the States by the system of school support 
by State taxation, the basis must be estimated true value, rather than assessed value. 

The latest authentic statement or estimate of the true value of all taxable property 
is that furnished by the Census Bureau. These valuations are for the year 1912, and 
are obviously unsatisfactory for the year 1920. Certain economists have estimated 
that one-third is a conservative estimate of the increase in money value of taxable 
property in the United States in 1920 over that of 1912. Recognizing that valuations 
estimated in such a manner are little better than rough guesses, it will nevertheless 
be evident that they are much nearer the valuations of 1920 than valuations estimated 
for 1912. 

In Table 51 three types of valuation have been employed: Assessed valuation, as 
reported for the year 1918-19 by the Census Bureau; estimated true valuation for 
1912; estimated true valuation for 1920. That the 1920 valuations employed in Table 
51 are conservative may be seen by comparing those given by Keith. (Jour, of Nat. 
Educ. Asso., vol. 10, No. 4, p. 79.) It is unnecessary to explain at length the consid- 
erations which led to the selection of the 11 States included in Table 51. It will be 
sufficient to note that they are States which have figured more or less prominently in 
the present account, and that they represent each of the five major divisions of States. 



52 



STATE POLICIES IN PUBLIC SCHOOL mSTANCE. 



Table 5L — Estimated school costs for year 1920 and rates of taxation necessary to provide 

75 per cent of same. 

(Amounts in millions of dollars; tax rate in mills.) 



Group or State. 


Estimat- 
ed school 
cost, 1920.1 


75 per 

cent of 

school 

cost, 1920.2 


Valuation of all taxable 
property. 


Rate necessary to pro- 
vide 75 per cent of 1920 
costs if levied on valu- 
ations— ^ 


Estimated 
true, 1912.3 


Estimated 
true, 1920.4 


Assessed, 
1919.5 


Estimated true. 


Assessed, 




1912 


1920 


1919. 


United States 


1,210.9 


908.1 


175,425.5 


233, 900. 7 


93,025.1 


5.2 


3.9 


9.8 


North Atlantic 


401.5 
455. 5 
79.7 
116.8 
157.1 


301.1 
341.6 
59.7 
87.6 
117.8 


52, 333. 9 
67, 168. 9 
13, 777. 8 
22, 030. 3 
19, 421. 9 


69, 778. 6 
89, 558. 6 
18, 370. 5 
29,373.8 
25,895.9 


1 33, 026. 9 
8 35, 137. 7 
9 7, 084. 1 
10, 256. 5 
10 7, 088. 2 


5.8 
5.1 
4.3 
4.0 
6.1 


4.3 
3.8 
3.3 
3.0 
4.6 


9.1 
9.7 
8.4 
8.5 
16.6 


North Central 


South Atlantic 


South Central 


Western 




Alabama 


9.4 
63.3 
13.5 
79.0 
37.9 
53.6 
39.6 
139.4 
12.2 
38.7 

4.5 


7.0 
47.5 
10.1 
59.2 
29.4 
40.2 
29,7 
104.5 

9.1 
29.0 

3.3 


2, 050. 
8, 023. 4 
2, 286. 4 
14, 596. 4 
7, 437. 
5, 735. 2 

5, 266. 9 
21, 912. 6 

1, 834. 3 

6, 552. 2 
496.9 


2, 733. 3 
10, 697. 9 
.3,048.6 
19,361.9 
9, 916. 1 
7,646.9 
7,022.6 
29, 216. 8 
2, 445. 8 
8, 736. 3 
662.0 


676.1 
11 358. 9 

1. 422. 1 

2. 638. 2 
1,444.4 

9 5, 898. 1 

1, 919. 7 

12, 520. 8 

726.3 

3, 012. 8 

' 412. 3 


3.4 
5.9 

4.4 
4.1 
4.0 

7.2 
5.6 
4.8 
5.0 
4.4 
6.8 


2.6 
4.4 
3.3 
3.1 
3.0 
5.3 
4.2 
3.6 
3.7 
3.3 
5.1 


10.5 

(12) 

7.2 
22.4 
20.3 

6.8 
15.4 

8.4 
12.6 

9.7 

8.0 


California 


Colorado 


Illinois ... 


Iowa 


Massachusetts 


Minnesota 


New York 


Tennessee 


Texas 


Vermnnt. 





Commis. of Educ. Rep., 1917, 2:53, Table 14. Estimates based on suggestion by Burgess, as explained 
n the text preceding this table. 

2 It will be evident from the text that the amounts given in this column are those estimated as necessary 
to cover all costs of instruction. 

3 Commis. of Educ. Rep., 1917, 2:59, Table 20. 

i Computed on basis of 133 per cent of 1912 valuation. For justification of this basis, see text. That the 
astimates used in this table are conservative wiU be evident if they are compared with those given by 
Keith (see J. A. H. Keith, "Can the United States Afford It?" Jour, of Nat. Ed. Assoc, 10:4, p. 79, Apr., 
1921). Some of the estimates in millions of dollars given by Keith are as follows: United States, 250,578.1; 
Alabama, 3,164.8; California, 12,166.0; New York, 30,.385.4. 

6 Data taken from Financial Statistics of States, 1919, p. 118, Table 28. Property subject to special taxes 
is reported only in the case of the States composing the North Atlantic and Western groups. It is not 
included in the total valuation of the other groups because this valuation is not reported in the majority 
of these States. 

6 The rates here given are computed on the basis of evaluation wliich includes thousands and hundreds 
of dollars; consequently they do* not agree in all cases with rates which would be arrived at if computed 
on the valuation appearing in this table which includes only miUions. 

' Assessed valuation of property subject to special property tax is included. 

8 Omitting property subject to special tax. 

9 Does not include District of Columbia. 

10 Includes 358.9, valuation of property in CaUfornia subject to special property tax, chiefly corporation 
property. California levies no general property tax, consequently the valuation of special property is 
included here. 

11 Valuation of only such property as is subject to special tax. 

12 No attempt is made to give a rate here in the case of Cahfornia, owing to the facts set forth in footnote 
11. The assessed valuation of real and personal property is not given. The poUcy of providing school 
revenue by a general State tax assumes that such a tax would be levied on real and personal prop- 
erty. General property taxes for school purposes are levied in CaUfornia by counties and districts, but 
not by the State. 

. In view of the obsoleteness of the estimated valuations of 1912, we may well confine 
our consideration of the rates presented in Table 51 to those computed on the basis 
of assessed valuation for 1919, and estimated true valuation, 1920. The significance 
of Table 51 may be most easily grasped by noting the liighest, the median, and the 
lowest tax rates as computed on 1919 assessed and 1920 true valuations, which would 
be required in order to put into efiect in the year 1920 our proposal of providing by 
State taxation sufficient revenue to cover 75 per cent of school costs. These rates may 
be conveniently presented in tabular form. 



THE BE MED Y. ^ 

Table 52. — Summary of tax rates presented in Table 51 . 



53 



Rank. 


Major division, rates computed on 
valuation— 


Eleven selected States, rates computed 
on valuation— 




1919 assessed. 


1920 true. 


1919 assessed. 


1920 true. 


Highest 


16:6 (Western) 

9.1 (North Atlan- 
tic). 

8.5 (South Cen- 
tral). 


4.6 (Western) 

3.8 (North Central) 

3.0 (South Cen- 
tral). 


22.4 (niinois) 

Between 10.5 (Ala- 
bama) and 9.7 
(Texas). 

6.8 (Massachu- 
setts). 


5.3(Massachusctts). 
3.6 (New York). 

2.6 (Alabama). 









Some conception of how far the policy we are advocating would go toward equalizing 
educational burdens, and thus evening out directly or indirectly many other inequal- 
ities in the educational situation, can best be gained by comparing the tax rates 
presented in Tables 51 and 52 with tax rates levied by local communities at the present 
time. Table 21 showed that of 7 New York rural districts studied, 4 levied a tax of 
more than 6 mills, and 1 of the 7 levied a tax of nearly 10 mills. From Table 50 we 
see that in New York a State tax of 8.4 mills levied on assessed valuation, or of 3.6 
mills on true valuation, would provide 75 per cent of school costs, as estimated for 1920. 
In Minnesota in the year 1919-20 the school tax rate levied by rural districts varied 
from less than 1 mill to more than 116 mills; and 285 districts levied a tax of more than 
20 mills. Table 50 has shown that a State tax of 15.4 mills upon assessed valuations 
or of 4.2 mills upon true valuation would carry out the proposal. ' From this discus- 
sion of those reforms in which the present account is cliiefly interested we may turn 
for a moment to a subject closely related, namely, new sources of school revenue. 

It is impossible to consider here this phase of the problem of school finance at length. 
However, in preceding paragraphs we have noted a growing tendency to tax corporate 
wealth, incomes, and intangible property. We have also given attention to the 
policies of certain States which devote the proceeds of such taxes to schools. It may 
well be added that if 75 per cent of the burden of school support be transferred to the 
State, the resultant equalization and relief would be such as to go far, temporarily at 
least, toward reducing the necessity of discovering new sources of school revenues. 
Finally, in view of the fact that in 1920 the national expenditures for luxuries, includ- 
ing such items as tobacco, snuff, cosmetics, perfume, face powder, chewing gum, 
amusements, and soft drinks, were more than 22 times the expenditures for all forms 
of education in 1918 and 30 per cent more than has been spent for public education 
in our entire history, it should be evident that to the sources of school revenue already 
suggested might well be added taxes on luxuries. 

It would be interesting to dwell at length upon the possible effects of putting into 
effect the policy which constitutes the major thesis of the present account. In view 
of the fact that the problem of maintaining free schools is fundamentally a financial 
problem, it might seem that the most important effects would be the equalization of 
school burdens; in other words, the substitution of an equalized load borne by all 
for a multitude of unequal loads borne in an isolated manner by individual communi- 
ties. But however important such a reform might be, it would, after all, be less 
important than the equalization of length of school terms, school facilities, and quality 
of instruction which would result. Were the State to provide the moneys for paying 
teachers' salaries, teachers would in many States, perhaps eventually in all, become 
in fact, and not merely as at present in theory, employees of the State. Contrast a 
school situation characterized by State equalities in school term, facilities, teachers' 
salaries, and quality of instruction with the situation wliich exists to-day from Colo- 
rado to Massachusetts and from Alabama to Maine. Not until a detailed study has 



lllllllllllllllillllllllllllllllllllllNIIIIIIIIMIIIIIIII 

021 490 391 

54 STATE POLICIES H^T PUBLIC SCHOOL FINAlSuisv ■ -^ 

been made of everj^ State in tlie Union will the present situation in its entirety be 
known. However, a considerable number of States have been subjected to study. 
Tables 17 to 21 and the accompanying text haA'e revealed the conditions in several 
of these. It may be added that the situation found in every State thus far studied 
is such as to make imperative radical reform in State policies of school finance. 

Attempts to bring about changes as radical as those we are urging will meet strong 
opposition. Such opposition will come chiefly from two groups of citizens. The 
first and largest group will be composed of those who insist upon regarding, directing, 
and financing schools as local institutions. It is this group who will attempt to block 
every effort to have their own local communities taxed for the purpose of providing 
a general State school fund for the common good. It will be necessary to educate 
these citizens and all others who regard the institutions of public education and the 
sources of public revenue from a purely local and selfish standpoint. This will involve 
no small amount of work. Indeed, it is a task of large proportion which will require 
the devoted services of all those who believe in public education. How necessary 
and how effective is legitimate educative propaganda has been shown in the cam- 
paigns for larger school support recently conducted in a number of the States, notably 
California and Texas. The outcry against mounting costs of public education has 
become so loud and so threatening that ail believers in democracy and free education 
must take heed lest the fields won for free schools by Mann, Bernard, and. Carter be 
surrendered to ignorance and selfishness. 

The second group who will offer formidable opposition to placing all costs of instruc- 
tion, or even the costs of teachers' salaries, upon the State, or upon the Nation and the 
State will be composed of those who sincerely believe that to do so will be to kill 
interest in and consequently^ support of public education. To these worshipers at 
the shrine of an ancient fetish the reply comes that after generations of local support 
and local control, the investigator finds the richest nation on the earth denying multi- 
tudes of her children any educational opportunities and herding thousands upon thous- 
ands of others in dismal and insanitary hovels imder the tutelage of wretchedly under- 
paid and proportionately ignorant, untrained, and negative teachers; finds hundreds of 
communities able to provide luxurious educational facilities with almost no effort, 
while thousands upon thousands, despite heroic exertions, can not provide even the 
barest necessities. Such is the outcome of the nation-wide policy of local support 
and local domination. 

o 



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